Application of big data in the U.S. OTC market

Today's increasingly strict compliance and regulatory requirements have led investors to pay more attention to the convenience and real-time access to complicated and accurate market and company information than ever before.

This spring, the us otc group released the OTC compliance data management solution, covering shares and company data in the three fields of its otcqx, otcqb, and OTC pink, in addition, the frequency of publication is twice a day. This helps intermediary companies, Compliance teams, and risk management teams better query their important data indicators, including the tax-free status of low-price shares, investor suitability requirements, and business status, this allows you to automatically analyze and monitor the targets of transactions.

Related documents include real-time market data and closing market data, and price information of the target including all the stocks on the otcqx, otcqb, and OTC pink; the company and individual stock information data also provides valuable information about corporate executives, directors, and service providers. In addition, all data files are classified by different companies according to otcqx, otcqb, and OTC pink. At present, many off-market intermediaries use this classification method to achieve risk control and compliance management.

It is true that, as an operating organization of the OTC market, the U.S. OTC group cannot grasp all and completely accurate data information. Therefore, the institution requires all types of companies to share information with investors and intermediary providers as widely as possible, so that the price formation will be more efficient. At the current technological level, a general investor and a company's shares may only have one relationship, either through a financial terminal or through an intermediary's trading system, incorrect or outdated information can easily mislead investors.

Data errors, outdated information, and data omissions on investors' computer screens will not only affect investors themselves, but also affect the transaction procedures of intermediaries and ultimately affect the liquidity of the entire OTC market.

In addition, there are some regulatory requirements that will affect off-site transaction intermediaries, because some U.S. financial-related bills impose rigid disclosure requirements on intermediaries for specific issues, including:

1. low-price stock rules (1934 Securities Act provisions 15g-2 to 15g-9)

The US Securities and Exchange Commission (SEC) specifies that the price of a low-price stock is lower than $5 per share, with limited assets or almost negligible returns. Low-price stocks are often considered to be speculative, so it is necessary for intermediaries to provide necessary information and due diligence when conducting publicity and education for investors.

Therefore, the data provided to investors should be clear whether a subject is exempt from the "low-price stock rule. In general, eligibility for exemption includes: the latest deal price is higher than $5, the tangible assets in the past year is more than $2 million, or more than $5 million in the past two years, the average annual income for the past three years is at least $6 million.

Here, the OTC transactions in otcqx must comply with the exemption rules before they are included, which is also one of the minimum requirements for their listing.

2. Finra 2114 terms

The Financial Supervision Authority (Finra) is an unofficial regulatory body established by the U.S. Congress and is mainly responsible for supervising the financial industry and financial intermediary institutions. Clause 2114 sets "regulatory requirements for investment advice to investors in the OTC market", which stipulates that intermediaries must review the latest version of the financial act before publishing investment research conclusions to investors, you can also query the financial information of all subjects whose names are otcqx, otcqb, and OTC pink.

Like the "low-price stock rule", this clause also provides for exemption. The subject of exemption needs: the issuer has at least $50 million in total assets and $10 million in owner equity in the latest financial audit year, or the issuer is a bank or insurance company, or the bidding price of over $50 is quoted on the off-site transaction record.

The intermediary institution shall, in real time, accurately indicate to investors whether a subject matter meets the preceding three exemption conditions. If any of the three conditions is met, it shall provide verifiable data at the same time.

3. Buyer's self-Attention Principle

The us otc group has matched some of the tags with a "leading" sign to remind investors that the tag is highly risky. This sign is very vividly displayed on the trading interface provided by the U.S. OTC transaction group, and the market interface provided by traders is also required to be retained, it is also required that this mark be applied to all externally disclosed documents.

This practice is recognized by most investors, intermediaries, clearing companies and other market entities as effective. In fact, many intermediary agencies directly refuse to provide these labeled transaction access services, not to mention when providing trading advice to investors.

Technological advances have greatly improved the convenience of investor transactions, allowing investors to focus a vast majority of their efforts on the property of the subject, rather than the operational level. intermediary institutions have also benefited a lot, moreover, technology makes the regulatory level more efficient. After entering the big data era, all companies must work hard at the investor relations level to ensure that they meet regulatory requirements such as SEC regulations, Finra principles, and blue sky legal cases, in this way, intermediaries and investors are urged to continue trading the company's shares to ensure sufficient liquidity. If a company wants to optimize its stock price changes, it must clearly disclose its compliance information to ensure that all market players have consistent, real-time, and accurate data for the company, in this way, institutional investors and individual investors can easily analyze the price changes of the subject.

Application of big data in the U.S. OTC market