On Which U.S. Capital Market Should You Seek Your Listing?

You have seven U.S. capital markets on which you can seek your listing.  They are:

• OTC Markets

  • OTCQX

  • OTCQB

  • OTC Pink.

• OTC Bulletin Board

• NASDAQ OMX Group

  • NASDAQ Global Select Market

  • NASDAQ Global Market

  • NASDAQ National Market

• NYSE Euronext

  • NYSE Amex Equities

  • NYSE

The Pink Sheets and OTC Bulletin Board are called non-listed markets.  The remaining five markets are called listed markets.

What is the difference between a non-listed and a listed trading market?

Listed trading markets including NASDAQ and the registered exchanges, such as NYSE or NYSE AMEX Equities have specific listing and maintenance standards, which are stringently monitored and enforced. Companies listed on a stock market have reporting obligations not just to the SEC but also to the market itself. Companies trading on a listed market have on-going regulatory relationship with the market itself. OTC quotation services including OTCBB, Pink Sheets merely facilitate quotation of unlisted securities.

Your stock is technically not “listed” in the OTCBB or any of the three OTC Markets. Your stock is merely “qualified for quotation.”

What does this mean?

You can only start your journey to a listed market if you are a company with significant revenues and profits and you meet all of the other stringent requirements to trade on a listed market.

If you an earlier stage company, your journey will start on the Pink Sheet or OTC Bulletin Board.

How do you choose between the OTC Bulletin Board and the OTC Markets?

Both the Bulletin Board and the Pink Sheet show quotations and facilitate trading in OTC securities, which in general mean securities that are not listed or traded on NASDAQ or a national securities exchange such as NYSE AMEX Equities or the NYSE. However, there are significant differences in the two.

OTC Bulletin Board

The OTCBB is displays real-time bid and ask price quotations, last-sale prices, and volume information in OTC equity securities.

The OTCBB is a quotation medium for subscribing members, not an issuer listing service, unlike NASDAQ or a national securities exchange such as AMEX or the NYSE.

There are no minimum standards such as price, number of shareholders, independent directors, corporate governance requirements and the like.

SEC and FINRA rules limit quotations on the OTCBB to the securities of companies that are required to file reports with the SEC under the 1934 “Filing Reports” Act and that are current in their reports filed with the SEC.

Issuers do not have any filing or reporting requirements with The NASDAQ Stock Market, Inc., or FINRA.

NASDAQ has no business relationship with the issuers of securities quoted on the OTCBB.

Investors must contact a broker/dealer to trade OTCBB securities. Investors do not have direct access to the OTCBB service.  The OTCBB provides access to more than 3,300 securities and includes more than 230 participating Market Makers.

OTCQB

The OTCQB Market is essentially the same as the OTC Bulletin Board, just run by a separate corporation.

OTCQX

The OTCQX Market has the same requirements as the OTCQB and the OTC Bulletin Board, plus the following requirements:

• Ongoing operations (no shells, blank check or special purpose acquisition companies);

• A minimum bid price of $0.10 (for preceding 90 business days);

• The company may not be subject to any bankruptcy or reorganization proceedings;

• The company must be duly organized, validly existing and in good standing under the laws of each jurisdiction in which the company is organized;

• At least 50 beneficial shareholders, each owning at least 100 shares of the Company's common stock;

• Ongoing quarterly and audited annual financial reports posted on OTCQX.com, a premier website for qualifying companies (SEC Registered issuers can use EDGAR); and

• Inclusion in the Standard & Poor's Corporation Records or Mergent Manuals (fka Moody's Manuals), which satisfies the Blue Sky requirements for secondary transactions in many states, together with a list of any other states in which the security is Blue Sky compliant and eligible to be sold by brokers in those states;

• DAD Letter of Introduction upon application process completion and quarterly and annually thereafter to OTC Markets Group Inc. confirming that the issuer has made adequate current information publicly available and meets the tier inclusion requirements.

OTC Pink Sheets

The Pink Sheets is a centralized quotation service that collects and publishes market maker quotes for OTC securities in real-time. Pink Sheets is neither an SEC Registered Stock Exchange nor a Broker-Dealer.

What is the primary difference?

Pink Sheets and the OTCBB are competing quotation services for OTC securities. Both are privately owned, but by different corporations.
The primary difference between the OTCBB/OTCQB/OTCQX and the OTC Pink Markets is that to be quoted on the OTCBB/OTCQB/OTCQX, a company must be required to file reports with the SEC under the 1934 “Filing Reports” Act and be current in its reports filed with the SEC. Pink Sheet companies do not have to be SEC reporting companies, although some are.

The Next Step: Moving Up to a Higher Market

Perhaps you can accomplish your goals by remaining on the Pink Sheets or OTCBB/OTCQB/OTCQX.  But if you can’t, you will need to move up to a higher market. 

What are the primary higher markets?

NASDAQ OMX Group

The NASDAQ markets are owned by a public company named NASDAQ OMX Group, Inc. It is the world’s largest exchange company. It delivers trading, exchange technology and public company services across six continents, with over 3,800 listed companies. It offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ originally stood for National Association of Securities Dealers Automated Quotations.

NASDAQ was founded in 1971 as a wholly-owned subsidiary of the Financial Industry Regulatory Authority, or FINRA (then known as the National Association of Securities Dealers, Inc.). Beginning in 2000, FINRA restructured and broadened ownership in NASDAQ by selling shares to FINRA members, investment companies and issuers listed on The NASDAQ Stock Market.

In connection with this restructuring, NASDAQ applied to the SEC to register The NASDAQ Stock Market as a national securities exchange. Prior to operating as an exchange, The NASDAQ Stock Market operated under an SEC-approved plan that provided a delegation of legal authority from FINRA to The NASDAQ Stock Market to operate as a stock market. FINRA fully divested its ownership of NASDAQ in 2006, and The NASDAQ Stock Market became fully operational as an independent registered national securities exchange in 2007.

In 2006, NASDAQ also reorganized its operations into a holding company structure. As a result, our exchange licenses and exchange and broker-dealer operations are held by its subsidiaries.

On February 27, 2008, NASDAQ and OMX AB combined their businesses and NASDAQ was renamed The NASDAQ OMX Group, Inc. Prior to the combination, OMX AB owned and operated the largest securities marketplace in Northern Europe.

NASDAQ BX Venture Market

NASDAQ has just introduced a new market in May 2011 for Smaller Reporting Companies called the NASDAQ Venture Market.

It is for companies with a strong business concept and market potential but because they do not fulfill the required financial requirements to list on a national securities exchange.  Its listing requirements that are targeted to smaller and earlier stage companies.

While the BX Venture Market has lower financial listing standards than the major national securities exchanges, the corporate governance requirements are similar to those required for listing on them. The BX Venture Market provides a well regulated, transparent platform for companies to gain additional visibility in the investment community. Further, companies and their shareholders will benefit from superior trading technology, as well as a robust portfolio of products and services.

How does the BX Venture Market compare to the NASDAQ Stock Market?

	NASDAQ	BX
Registered under Section 12b of the Exchange Act	Yes	Yes
Disclosure of Materials compliant with Reg FD	Yes	Yes
Current in Annual and Quarterly Filings with the SEC	Yes	Yes
Comply with the Voting Rights Rule	Yes	Yes
National Securities Exchange	Yes	Yes
Direct Registration Program	Yes	Yes
Fully Independent Audit Committee	Yes	Yes
Code of Conduct	Yes	Yes
Annual Shareholders Meeting	Yes	Yes
Sarbanes Oxley and Dodd-Frank Compliant	Yes	Yes
Public Interest Review	Yes	Yes
Shareholder Approval for use of Equity Compensation	Yes	Yes
National Market System Securities	Yes	No*
* Due to BX Venture Market’s lower financial listing standards, securities listed on the BX Venture Market will not be classified as National Market System (“NMS”) securities. This means that, the unlike the NMS securities listed on NASDAQ, securities listed on the BX Venture Market will not be subject to trade-through rules. These rules mandate that when a security is traded in more than one venue, transactions may not occur in one market if a better price is offered on another market. BX Venture Market listed securities are eligible to be traded on the over-the-counter markets. Trades completed in BX Venture Market securities will not be reported to the NMS consolidated tape plans.
Shareholder Approval for Share Issuance	Yes	No*
* Companies listed on the BX Venture Market are required to obtain shareholder approval for equity compensation. However, they are not required to obtain shareholder approval for other issuances of common stock. This differs from the rules applicable to companies listed on NASDAQ, which are also required to seek shareholder approval for any stock issuance of 20% or more at a price less than the greater of book or market value, any stock issuance that could result in a change of control, and certain stock issuances in connection with acquisitions.
Subject to Trade-Through Rules	Yes	No*
* Due to BX Venture Market’s lower financial listing standards, securities listed on the BX Venture Market will not be classified as National Market System (“NMS”) securities. This means that, the unlike the NMS securities listed on NASDAQ, securities listed on the BX Venture Market will not be subject to trade-through rules. These rules mandate that when a security is traded in more than one venue, transactions may not occur in one market if a better price is offered on another market. BX Venture Market listed securities are eligible to be traded on the over-the-counter markets. Trades completed in BX Venture Market securities will not be reported to the NMS consolidated tape plans.
Majority Independent Board	Yes	No*
* Companies listed on the BX Venture Market will need to have a fully independent audit committee with at least three members. Unlike companies listed on NASDAQ, however, they will not be required to have a majority of independent directors on their boards.
"Blue-Sky" Exemptions	Yes	No*
* Securities listed on the BX Venture Market are not exempt from state “blue sky” rules relating to the registration of securities under Section 18 of the Securities Act of 1933 and the rules there under. Companies listed on the BX Venture Market must therefore satisfy state law registration requirements and other state laws that regulate the sale and offering of securities. Furthermore, a company listed on the BX Venture Market may not rely on any exemption available to companies listed on the former Boston Stock Exchange and will be delisted if they attempt to rely on such an exemption. Securities listed on NASDAQ, in contrast, enjoy an exemption from the “blue sky” rules.

Three Larger NASDAQ Markets

NASDAQ operates three primary trading markets in the U.S. on which your securities can be listed:

• NASDAQ Global Select Market is for companies that meet the most stringent initial financial listing standards ever set by a stock market.

• NASDAQ Global Market, formerly the NASDAQ National Market is the market for listed companies that do not meet the stringent listing requirement of the Global Select Market.

• NASDAQ Capital Market, formerly the NASDAQ SmallCap Market, was renamed in 2005 to reflect the core purpose of this market which is capital raising.

NYSE Euronext

NYSE Euronext is the world’s most diverse exchange group. It offers a broad array of products and services in cash equities, futures, options, swaps, exchange-traded products, bonds, market data, and commercial technology solutions, all designed to meet the evolving needs of issuers, investors, financial institutions and market participants.

It is also the world’s leading, most liquid equities exchange group. With more listed issues than any other exchange group, trading on NYSE Euronext’s equity markets represents more than one-third of the world’s cash equities volume.

NYSE Euronext operates two primary trading markets in the U.S. on which your securities can be listed:

• NYSE—the New York Stock Exchange, or NYSE, is the world’s premier listing venue and the largest and most liquid cash equities exchange in the world. As of December 31, 2008, 2,447 issuers were listed on the NYSE, including a cross-section of large, mid-size and small-cap U.S. and non-U.S. companies. These operating companies represented a total global market value of approximately $15 trillion, and represented approximately 93% of the publicly traded companies that constitute the Dow Jones Industrial Average and 82% of the S&P 500 Index.

• NYSE Amex—NYSE Amex, formerly the American Stock Exchange, became part of NYSE Euronext in October 2008 and is the U.S. listing venue for emerging growth companies. As of December 31, 2008, 466 companies were listed on NYSE Amex, representing a total market capitalization of $124.5 billion.

AMEX

In 1921 the roar of the market activities on the street dictated a move indoors into the building where it still resides on Trinity Place in New York City. The Amex was referred to as the New York Curb Exchange from 1929 to 1953 when it changed its name to the American Stock Exchange.

For many years the Amex was a marketplace for the securities of companies that could not meet the high standards of the New York Stock Exchange. Later, it became a an even more respectable exchange as it began to introduce its own set of listing requirements for securities and admissions standards for members of the exchange.

In 1998, the American Stock Exchange merged with the National Association of Securities Dealers (NASD), the same organization that manages the NASDAQ stock market. The combined companies, however, continued to operate separate exchanges.

In late 2003 the American Stock Exchange regained its independence. After only six years under the control of NASD, The Amex Membership Corporation completed an agreement to transfer control of the exchange back to its membership. The Amex claims to be the second largest options exchange in the world.

NYSE

The history of the New York Stock Exchange begins with the signing of the Buttonwood Agreement by twenty-four New York City stockbrokers and merchants on May 17, 1792, outside at 68 Wall Street under a Buttonwood tree. In the beginning there were five securities traded in New York City with the first listed company on the NYSE being the Bank of New York.

Over the years, the NYSE has continued to grow.  Recently, in 2007, the NYSE Group, Inc. combined with Euronext N.V. to create the holding company NYSE Euronext. NYSE Euronext (NYSE/New York and Euronext/Paris: NYX) describes itself as "the world ' s largest and most liquid exchange group ... [comprised of] six cash equities exchanges in five countries and six derivatives exchanges."