I have called a ton of people today… all say the same thing, the BB market is going to be greatly diminished going forward…. here is the presentation OTC Markets just sent to me… powerful info inside….. Send to your friends. A transformation is upon us. -Tobin

1. OTC Markets Group Inc.
January 2011

2. Who we are
OTC Markets Group operates the world's largest electronic marketplace for trading
unlisted stocks. Our open network of competing broker-dealers provides investors
with the best prices in over 10,000 OTC securities. We organize the OTC into
three tiers:
The Quality Controlled Marketplace
The U.S. Reporting Company Marketplace
The Speculative Trading Marketplace
so investors can identify the level and quality of information companies provide.
Through innovative technology and exceptional customer service, our mission is to
create a transparent and efficient world-class marketplace.
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3. Our Network
• 160 Market Maker, Agency Broker, and ECN Broker‐Dealers competing on our
platform to provide execution services for investors in unlisted securities
• Easy investor access through any U.S. broker‐dealer
• Seamless connectivity to broker‐dealer order management systems
• Real‐time prices and tiers on all major online brokers (E*Trade, TD
Ameritrade, Schwab, Fidelity, Scottrade, etc)
• Distribution of prices and tiers through major market data vendors and
financial portals
• With 800,000 visits and 24 million page views, www.otcmarkets.com is the
central information source for investors interested in unlisted stocks
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4. State of the OTC – 2010 Volumes
Dollar Volumes have rebounded from Flash Crash hangover
& OTC Link volumes continue to increase.
09-10 OTC Market Quarterly $ Volume
45
40
35
30
Billions
25
20
15
10
5
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2009 2009 2009 2009 2010 2010 2010 2010
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5. State of the OTC – FINRA’s BB
Priced Quotes OTC Markets FINRA BB
Overview
70000
61,652 4,396 Priced Quotes
60000
50000 21 BB Only Securities
40000 2,858 Dually Quoted
Securities – Down from
30000 3,149 in Q1 2010
20000
1,667 BB securities with
No Inside Price being
10000
created (< 2 priced
4,396 quotes)
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
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6. State of the OTC – Trading By Tier
December 2010 – 96.2% of OTC Trading Volume occurred in
companies making current disclosure to investors.
OTC Market Tier # Securities Monthly $ Vol. % of Total $ Vol.
OTCQX 159 $1,971,091,273 13.8%
OTCQB 3,851 $3,970,777,887 27.9%
OTC Pink - Current Information 1,830 $7,762,691,726 54.5%
OTC Pink - Limited Information 749 $339,886,184 2.4%
OTC Pink - No Information 3,375 $207,888,915 1.5%
FINRA BB Only 22 $14,545 0.0001%
Total Quoted OTC Market 9,986 $14,252,350,531
~3,300 securities only represented 1.5% of dollar volume.
No Information = No Trading.
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7. State of the OTC – Trading Across
Alternative Marketplaces
Average Average Average $
# $ Volume per Trades Per Amount per
Market Securities $ Volume Trade Count Security Security Trade
OTCQX 159 $1,971,091,273 114,685 $12,396,800 721 $17,187
LSE AIM 1,194 $5,627,687,548 498,894 $4,713,306 418 $11,280
OTC Pink - Current 1,830 $7,762,691,726 610,890 $4,241,908 334 $12,707
TSX Venture 2,147 $4,588,986,695 1,243,502 $2,137,395 579 $3,690
OTCQB 3,851 $3,970,777,887 1,156,349 $1,031,103 300 $3,434
Average $ Volume per Security measures marketplace liquidity.
Average Trades per Security gauges the amount of investors participating in a marketplace.
Average $ Amount per Trade is an indication of the types of investors participating in a marketplace.
Source: 30 December 2010, OTC Markets Group, TMX Group, LSE
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8. An Increasing Number of Globally Recognized
Companies Trade OTCQX
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9. OTCQX Offers Greater Visibility and Access
Visibility
Top Tier of the OTC Markets
Highest levels of trading activity & liquidity
Quality Control
Financial Standards
Qualitative Review
Sponsorship by DAD/PAL
Transparency
Real-Time Level 2 Quotes
Easy investor access to company
information & financial disclosure
Access
Blue Sky Monitoring & Advisory
Broker-dealer and investment advisor
compliance
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10. More Open Reporting Options Than
Traditional Exchanges
1. SEC Reporting Standard
12(g) registered and reporting (files10Ks or 20Fs, etc.)
2. International Information Standard
Exempt from registration under 12g3-2(b) and files home country disclosure in
English
3. Alternative Reporting Standard
For companies not required to file with the SEC that have fewer than 500
record holders and less than $10MM in assets.
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11. DAD/PAL Advisors
Providing Skilled Market Sponsorship and Advice
• DADs (Designated Advisor for Disclosure) sponsor U.S.
companies on OTCQX.
• PALs (Principal American Liaison) sponsor non-U.S. companies on
International OTCQX.
• Companies must be sponsored by a qualified investment bank, DR
Bank (ADRS only) or attorney DAD/PAL to list on OTCQX.
• The DAD/PAL role is modeled after the Nomads on the AIM
market, but built to work within the U.S. framework.
• OTCQX relies on the DAD/PAL community to sponsor credible and
trustworthy companies while providing professional securities
advice to the companies’ management.
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12. OTC Market Segments Comparison
OTCQX OTCQB FINRA BB Pink
Qualitative listing standards NO NO NO
Listing agreement NO NO NO
Audited Current Disclosure NO
Required
SEC or US Banking NO NO
Reporting Only
Shells and distressed NO NO NO
companies excluded
FINRA regulated quotes
Broker-dealer driven
marketplace
Electronic Marketplace NO
Services for Issuers NO
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13. Upcoming OTC Market Structure Changes in 2011
• Access Fees
• Limit Order Display
• Market Order Protection
• FINRA BB Closing Down
• OTC Link Alternative Trading System (ATS)
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14. Regulatory Changes – OTC Link
We are registering our OTC Link - Interdealer Quotation System
with the SEC and FINRA to operate under Regulation ATS.
•Anticipation of approval is end of Q1
•There will be no changes from the perspective of the
Subscribers to our products and services
•Trading Services products will be provided by OTC Link ATS/BD
•Subscribers will access the market place as they do now
•The ATS is being created to act as a Regulated Interdealer
Quotation System, not an ECN or Dark Pool
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