Will New Rule Disrupt The Penny Stock Market this Fall? – Yahoo Finance

techy October 01, 2021 Stock Market Investing,

On September 16, 2020, the SEC amended its Exchange Act Rule 15c2-11. The new changes took effect on September 28th. Ultimately the new rule means everyday retail traders are no longer able to buy information over-the-counter (OTC) Pink stocks.

OTC Markets Group is the largest U.S. marketplace for OTC securities with 12,871 securities listed as of Aug. 31st 2021. The securities are listed in three tiers based on the quality and quantity of the listed companies’ information and disclosures.

OTCQX is the top tier of the three tiers with only 595 securities. Stocks that trade on this forum must meet more stringent qualification criteria compared to the other levels.

OTCQB, also known as “The Venture Market,” consists of early-stage and developing U.S. and international companies and has 1,095 securities.

OTC Pink is the lowest level and most speculative tier of the three marketplaces for the trading of over-the-counter stocks with 11,181 securities.

This tiered structure provides different levels of transparency, so investors know what type of information is available for each company they wish to trade and allows investors and traders to buy stock in companies not listed on national exchanges like the New York Stock Exchange or the NASDAQ.

The OTC Pink sheets had over 11,000 securities as of August 31st that could be affected by the amendment and potentially pushed down to the Grey Market if they don’t become current with their filings.

What Is Pink No Information?

To see how these new rules will impact traders, we must understand how the new amendment seeks to modernize Pink No information Securities. This will be done by:

Requiring that information about the issuer and its security be current and publicly available before a broker-dealer can begin quoting that security
Limit broker-dealers’ reliance on certain exceptions to the rule when issuer information is not current and publicly available
Provide exceptions to reduce unnecessary burdens on broker-dealers to quote certain OTC securities that may be susceptible to fraud and manipulation

How Will the New Regulations Impact that Market?

The SEC says this amendment “enhances disclosure and investor protection in the OTC market by ensuring that broker-dealers, in their role as professional gatekeepers to this market, do not publish quotations for an issuer’s security when current issuer information is not publicly available, subject to certain exceptions.”

The biggest concern among traders is that this new rule will create fewer trading opportunities. The new regulations will push securities that currently trade on the Pink Market and do not disclose financial information onto the Gray Market where securities have been suspended from official trading. OTC Market expected prior to the change that 2800 companies of the over 11,000 OTC pink securities could disappear from OTC Pink and be pushed down to the Gray Market. With ~20% fewer stocks to watch, penny stock investors’ attention will focus on the remaining 80%. Meaning those stocks left standing will see a boost in interest.

Where Should Traders Look?

Rather than looking at the remaining OTC Pink securities, it could perhaps be more interesting to look at early-stage OTCQB tech companies that have recently uplisted over the summer in the look for the next rising star. If the trading of the OTC market stays the same a dollar volume of YTD $0.5Trillion* (annualized $0.75B).

To be eligible to OTCQB, companies must be current in their reporting, undergo annual verification and certification, meet a $0.01 bid test, not be in bankruptcy, have at least 50 beneficial shareholders, each owning at least 100 shares, and a public float more than 10% of the total shares outstanding. Companies listed on OTCQB report to a U.S. regulator such as the SEC and must follow standards to improve transparency.

Wikisoft Corp. – Potential Rising Stars

Wikisoft Corp. (OTCQB: WSFT) has had an explosive journey. After new management took over a bit more than a year ago Wikisoft have managed to launch an investor site (wikisoft.com), relaunched their flagship platform (wikiprofile.com), $20M in funding and uplisted to OTCQB in August.

Wikisoft’s vision is to create opportunities globally for business professionals and businesses to make informed career and hiring decisions. This is achieved on Wikiprofile.com platform which provides relevant and valid information to make informed career and hiring decisions globally for business professionals with a database now exceeding 175 million business profiles. The platform offers a free and simple sign-up process with an automatic database look-up to make it easy to join the platform.

Wikisoft Corp. entered into a Common Stock Purchase Agreement with White Lion Capital LLC a millennial-run fund based out of Los Angeles that seeks to make investments into growing public companies that seek to become industry leaders. The Purchase Agreement provides that the Company has the right, but not the obligation to cause White Lion Capital to purchase up to $20,000,000 of the Company’s common stock. Is the tech-savvy millennial-run fund on to something?

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