Starting July 1, 2025, the OTC Markets Group will introduce OTCID Basic Market, replacing the current Pink Current tier. The OTC believes that this change will enhance transparency and provide investors with clearer insights into the level of disclosure and engagement from companies trading in the over-the-counter market. Companies currently traded on the OTCQB or OTCQX will not be affected by the change.
What is the New OTCID?
The OTCID will serve as a basic reporting market below the premium OTCQB and OTCQX markets. It establishes a framework requiring companies to meet minimal disclosure standards while providing management certifications. This tier is designed to distinguish companies actively participating in disclosure from those that do not, creating a more organized and transparent marketplace.
Key Requirements for Listing on the OTCID
To qualify for the OTCID tier, companies must meet the requirements of the new OTCID Rules including the following:
- Subscription to the OTC Disclosure & News Service (DNS): Companies must subscribe to the OTC DNS to provide current disclosures.
- Disclosure Standards: Companies must submit quarterly and annual disclosures through DNS, the SEC’s EDGAR system, or SEDAR (available in 2025).
- Management Certification: Companies must submit an annual management certification or 12g3-2(b) certification.
- Verified Company Profile: Companies must maintain a verified profile on the OTC Markets website via OTCIQ.
- Share Data Submission: Share data must be provided through the Transfer Agent Verified Shares Program or directly to OTC Markets if the company acts as its own transfer agent.
These requirements are designed to ensure that companies listed on the OTCID tier are committed to transparency and provide investors with reliable information.
Implications for Companies and Investors
Companies that fail to meet the new OTCID standards by July 1, 2025 will be relegated to the Pink Limited or Expert Market tiers, signaling a lack of compliance to investors. The OTC expects this change to bolster investor confidence by providing a clearer distinction between compliant and non-compliant issuers.
If your company already subscribes to the OTC DNS, you do not need to submit a new application for the OTCID, but you must still follow the additional requirements, such as filing an annual management certification. However, existing subscribers to the OTCIQ Basic Service are required to apply for the OTCID.
Application Deadline & Process
Companies that intend to trade on the OTCID must submit a new application for the OTCID via the OTC gateway no later than May 1, 2025 to ensure that they are eligible on July 1.
The application is straightforward but requires the company to:
- Create an account and submit information about the company and the directors and officers.
- Authorize background checks.
- Provide required documentation, including a recent shareholder and NOBO list.
- Pay the $3,500 application fee.
What Happens if Companies Fail to Apply?
Companies that don’t apply timely or don’t qualify for the OTCID, will be relegated to the Pink Limited Market or the Expert Market.
- The Pink Limited Market is for companies that provide limited disclosure or fail to meet the requirements of higher tiers like OTCID. These companies must provide less stringent disclosure than the OTCID tier, including basic financial information and other minimal updates. Securities in this tier are accessible to the general public, but the limited information available makes them riskier investments. As a result, companies in this tier are often viewed as less transparent, which may deter many investors.
- The Expert Market is designed for companies that provide little to no public disclosure or fail to meet even the minimal standards of the Pink Limited Market. Companies in this tier are not required to provide public disclosures, but the shares are not available to the general public and trading is limited to broker-dealers, institutions, and sophisticated investors. The lack of public information and restricted access make these securities highly illiquid and speculative.
The OTC’s new market chart explaining the trading tiers is available here.
Increased Transparency and Credibility
For companies, the new OTCID requirements represent an opportunity to demonstrate transparency and accountability, potentially attracting more investors. For investors, OTCID offers a more reliable framework for assessing the credibility of OTC-listed securities.
