• Carsted Rosenberg

OTCQX Market for Nordic and DACH Issuers

Updated: Jul 5

A quotation on OTCQX Market offers an effective and inexpensive route for Nordic and DACH companies to have their domestic shares traded in the United States. This significantly increases liquidity in the home market, diversifies the shareholder base, and offers added value for existing shareholders.

If you are a Danish company with shares listed on a Nordic stock exchange, you can easily have your shares cross-traded in the United States on the OTC Market platform. This increases your market visibility and enables US investors to invest directly in you. This option to build liquidity in the US and in the home market is open to any Nordic or foreign company. Here is how it works:


What benefits does it offer for Nordic companies?

If you are a stock exchange listed issuer on a regulated Nordic stock exchange, you can have your shares traded in USD in the United States on the OTCQX Market without having to go through a secondary listing. This has the following benefits:

  • Liquidity in your home market increases by an average 26%

  • Liquidity in the US market increases by an average of 67%

  • an average 128 basis points of value is created for your shareholders

  • U.S. ownership more than doubles after joining OTCQX

[This data is provided by Oxford Metrica. Oxford Metrica analysed all international companies that joined OTCQX 2007-2019. Price and volume data were collected for each issuer one year prior to joining and up to three years after.]


What is OTC Markets?

OTC Markets Group Inc. (OTCQX: OTCM) operates the OTCQX Best Market, the OTCQB Venture Market, and the Pink Open Market for 11,000 U.S. and global securities. OTC Markets Group provides international companies with an efficient and transparent trading platform in the US capital markets. Through OTC Link ATS, it connects a diverse network of broker-dealers that provide liquidity and execution services. This enables US investors to easily trade through the broker of their choice and empowers quoted companies to improve the quality of information available for investors. Choosing to trade via OTC Markets allows you to access new capital and to expand your shareholder base in the US, without the duplicative regulatory requirements of a US exchange listing. OTC Markets allow foreign companies to use their home country disclosure in English in lieu of SEC reporting. OTC Markets is a New York-based stock market that operates three securities markets based on the quality and quantity of the quoted companies and the information disclosed. It enables domestic and foreign securities to be traded over-the-counter in the United States.


What is OTCQX?

The OTCQX® Best Market is for established, investor-focused U.S. and international companies. The companies found on OTCQX are distinguished by the integrity of their operations and diligence with which they convey their qualifications. For regulatory purposes, OTC Markets operates an "inter-dealer quotation system" rather than a "national securities exchange". This means that shares can be traded "over the counter", i.e. trading is done off-exchange directly between the market makers using OTC Link. OTCQX offers listed Nordic and foreign companies the opportunity to build their visibility, expand their liquidity and diversify their shareholder base on an established, public market in the United States without the more stringent procedures required for a secondary exchange listing. Nordic and foreign listed companies can qualify for OTCQX International and OTCQX International Premier if they meet the necessary criteria to be quoted. To be cross-traded on OTCQX, Nordic companies must undergo a qualitative review by OTC Markets Group. They are not required to be registered with or reporting to the SEC. However, they must post financial information with OTC Markets Group in English. In addition, further quality control is provided by requiring every issuer to be sponsored by approved third-party investment banks or law firms, called OTCQX Sponsors.


Why are US funds and retail investors not trading directly on the Nordic stock exchanges?

Larger US investors can usually trade directly in foreign markets. However, many US investors, especially smaller US funds and retail investors, prefer to see quotes in US dollars during their regular trading hours. They may also prefer using a US broker to execute the trade in the United States. If a Danish company is listed on e.g. Nasdaq Copenhagen, Nasdaq First North Premier or Nasdaq First North in Danish kroner, a large number of US investors will not have access to trading in the shares nor will they be able to trade in the same time zone. OTCQX can solve this by opening up cross-trading of the foreign listed shares in the United States.


What are the requirements for Nordic companies to be traded on OTCQX?

To qualify for OTCQX International as a foreign issuer, you must meet the following main criteria:

Not being a Penny Stock means that for OTCQX International you must either have (i) USD 2 million in net tangible assets (or USD 5 million if you have less than 3 years of operations); or (ii) an average of USD 6 million in revenue for the past 3 years; or (iii) a bid of USD 5 and either net income of USD 500,000, or net tangible assets of USD 1 million, or revenues of USD 2 million, or total assets of USD 5 million. For OTCQX International Premier this means that you must either have USD 2 million in net tangible assets or USD 6 million average revenue for the past 3 years.


To qualify for OTCQX International, you will initially need to meet the following minimum financial standards:

  • Global markets capitalisation of USD 10 million

  • Bid price of USD 0.25

  • 50 beneficial shareholders owning 100 shares or more

To qualify for OTCQX International Premier, you will initially need to meet the following minimum financial standards:

  • Global markets capitalisation of USD 1 billion

  • 5 years operating history

  • an average weekly volume of 200,000 shares or USD 1 million for the previous 6 months

Following you initial admission, you will be subject to certain ongoing financial standards to maintain you quotation on OTCQX international and OTCQX International Premier.


What are the requirements for Nordic companies to be traded on OTCQB?

If your company cannot meet the higher financial standards for OTCQX, then it may be appropriate to consider seeking a quotation on OTCQB. The OTCQB market is the second tier of the markets operated by OTC Markets Group. Unlike the OTCQX market, there are no minimum financial standards on the OTCQB market other than a USD 0.01 minimum bid price. If you do not qualify for the OTCQX market, you may qualify for the OTCQB market.


What does it cost me?

The associated costs are not very high compared to a traditional stock exchange listing. To be traded on OTCQX, you will pay an annual fee of USD 23,000. When joining, you will also pay a USD 5,000 application fee and the legal fees for your OTCQX sponsor and the associated legal work. This is an inexpensive solution to significantly increase your trading liquidity and to add value to your domestic shares.


Who else does this?

OTC Markets operates a market where more than 11,000 U.S. and global securities are being traded. About 3,700 F shares are being traded on OTC Markets. Nordic companies on OTCQX include:

Other companies on OTCQX include:

How will this affect my shares in the Nordics?

While the shares can be traded on the inter-dealer quotation system provided by OTC Markets, all USD cross-trading in your shares will continue to be settled on your domestic stock exchange. Liquidity in your shares will increase due to increased trading volume and this adds an average of 128 basis points of value for your shareholders. In addition, your shareholder base will become increasingly diversified and US ownership will increase as a result. This raises the profile of your company in the world's largest and most sophisticated capital market all the while you remain listred on your existing stock exchange.


What is a qualified foreign exchange?

A qualified foreign exchange is a non-U.S. stock exchange approved by OTC Markets Group as a primary stock exchange of a foreign issuer. This is your home country stock exchange where you are being regulated and supervised. The following Nordic exchanges are qualified foreign exchanges:

  • Nasdaq First North

  • Nasdaq First North Premier

  • Nasdaq OMX Nordic Exchange Copenhagen

  • Nasdaq OMX Nordic Exchange Helsinki

  • Nasdaq OMX Nordic Exchange Iceland

  • Nasdaq OMX Nordic Exchange Stockholm

  • Nordic Growth Market

  • Oslo Axxess

  • Olso Børs

What is an OTCQX Sponsor

A qualified foreign issuer seeking to qualify for OTCQX needs to have a letter of introduction from an approved OTCQX Sponsor. A OTCQX Sponsor, usually an investment bank or a law firm, must satisfy certain criteria and be approved by the OTC Markets Group. Sponsor eligibility is limited to the most qualified firms with high levels of capital markets expertise. Carsted Rosenberg is an approved sponsor for OTCQX and OTCQB. Your sponsor will assist you with your application and guide you through the process together with the OTC Markets Group to ensure a successful and U.S. compliant result.


What is Rule 12g3-2(b)?

Under Exchange Act Rule 12g3-2(b), international companies are exempt from SEC reporting if they are a Foreign Private Issuer and make whatever information is required by their home market regulator publicly available to U.S. investors in English. For Nordic issuers, this means that they can rely on their disclosures in English via their home market without duplication. It is important to note that the exemption available under Rule 12g3-2(b) for international issuers on OTCQX does not apply to the larger U.S. exchanges, NYSE and Nasdaq.


What is an F Share?

An F share is a foreign listed share that is being traded in the United States and has received a U.S. ticker. Broker-dealers create trading symbols, called tickers, of foreign securities in the U.S. These tickers are five letters long and they end with the letter “F”. For that reason they are traditionally referred to as "F shares". More than 2,000 companies with primary listings on more than 30 global markets, such as London, Frankfurt, Paris, Madrid, Milan, Copenhagen and Stockholm, have an F share traded on OTC Markets.


We already spend a lot of time and resources on compliance and reporting. Will this add more?

There are no SEC filing requirements, Sarbanes Oxley Compliance, or US GAAP financial standards needed for admission. You can leverage your home country reporting requirements. If you already make your disclosures in English, the OTC Disclosure & News Service available for quoted OTCQX companies will distribute the information to the makets necessary for compliance without unnecessary duplication.


What does this mean for the US market?

OTCQX Market data is fed to all major US financial media outlets and portals ensuring that your company's material news and updates reaches your desired US investor audience. While the major financial institutions are most known to Nordic and foreign issuers, there are a significant number of fund managers in smaller investment banks, family offices and high net worth individuals as well as private investors who are significantly more active in the US retail space than in Europe.


Do we have to register with the Securities and Exchange Commission?

No, there are no SEC filing requirements to be traded on OTCQX. Foreign issuers seeking a dual-listing on a US Exchange such as New York Stock Exchange or Nasdaq are subject to burdensome US exchange listing requirements and different accounting standards that can increase risk, and become resource-intensive, time-consuming and expensive. The only exception is if your domestic trading in the Nordics falls below 55% of your worldwide trading and more than 20% of worldwide trading takes place in the United States, then you will become subject to certain addditional U.S. legal requirements relating to the offering and sale of securities, as the 12g3-2(b) exemption no longer applies to your company.


What other benefits does this offer me?

As a company on OTCQX, the company will have a number of additional tangible benefits to raise your company's profile in the wider US financial markets:

  • Virtual Investor Conferences: You can conduct investor presentations online directly from your own offices in the Nordics without incurring costs and time for an investor road show.

  • OTCQX Video Series: You can reach a wider audience with digital financial news organisations in New York and London via Proactive.

  • OTCQX Executive Interviews: You can participate in monthly company features which are distributed to a network of broker-dealers, investors and advisers to incrfease your company profile in the US.

  • OTC Market Center: You can host investor meetings and events at the offices of OTC Markets in New York's Financial Disctrict.

What are the downsides?

If your shares are so successful that U.S. trading volumes become so significant that trading in your home jurisdiction and any second non-US. jurisdiction falls below an aggregate of 55% of worldwide trading in a fiscal year, then the exemption under Rule 12g3-2(b) would no longer apply. You would then have to become a SEC Reporting Company unless another exemption from SEC registration requirements is available. This would be a very rare event and would be a result of immensely successful trading exceeding your initial home markets. Foreign private issuers normally maintain more than 55% of their worldwide trading on their home country stock exchange. While liability under U.S. securities laws can be complex, foreign issuers that are not registered with the SEC will generally have less exposure to regulatory action by the SEC or otherwise be held liable in the normal course of business.


Where do I get more information?

We will be publishing a series of articles and guides to communicate the clear and significant benefits for Nordic and foreign companies on our website. In addition, we will be hosting a webinar to explain the necessary steps and the procedure required for Nordic companies to obtain a quotation on OTCQX. Please get in touch with us to discuss how we may help you on the way. Meanwhile, please consult the OTC Markets White Paper on OTCQX for Nordic Issuers:

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OTCQX Rules for International Companies (Version 8.5 dated 5 October 2020)

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Who can I contact to move this forward?

If you want to know more or want to obtain U.S. market entry via an OTCQX quotation, please contact any of Brad Furber, Michael Rosenberg or Andreas Tamasauskas at Carsted Rosenberg to discuss how we can move your transaction forward. As an OTCQX Sponsor, we are here to help you.


To learn more about the OTCQX Market, contact VP, International Corporate Services Joe Coveney at jcoveney@otcmarkets.com. To learn more about how we create better informed and more efficient markets, visit www.otcmarkets.com. OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.


This briefing is intended to provide general information for Nordic, DACH and other foreign issuers related to joining OTCQX or OTCQB markets. It is not intended to provide definitive legal or tax advice. No legal, tax or business decisions should be based solely on its content. The briefing does not necessarily deal with every important topic and is not designed to provide legal or other advice. It shall not be used as a substitute for legal advice and none may be inferred. It is only intended for general information on matters of interest. While we endeavour to represent the information as accurately and correctly as possible, we cannot accept any responsibility for any errors or omissions.


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