OTC Markets' New Data Tool Makes It Easier To Identify Risk Factors

OTC Markets Group announced earlier this month the launch of Canari, a new compliance data tool designed to help compliance professionals delve into data associated with securities on the OTCQX, OTCQB, Pink and Grey Markets.

We’ve written about the warning and transparency symbols OTC Markets uses to show a security’s compliance with the market’s disclosure regulations and the associated risks that might accompany it. The purpose of Canari is to take this information that was previously available on individual security pages, or via the Compliance Analytics file product, and pull it into an easy to use interface.

“Our goal was to make it simple for analysts and compliance professionals to search and drill down into compliance data,” said Matt Fuchs, Executive Vice President of Market Data at OTC Markets. “This tool allows compliance teams to interact with the vast amount of information and distill it based on their firms’ compliance policies.“

Canari tracks securities along 19 risk factors, each of which is assigned a point value based on OTC Markets’ algorithm. Each security is then given a Total Risk Score based on the number and kind of risk factors associated with it.

The score operates on a scale of 0-52—the higher the score, the greater the risk

Fuchs explained that scores are typically correlated to associated market tiers. For example, the mean score on the OTCQX Market is about four, while the mean score for the Pink Market is 13. The highest score they usually see is in the low-30’s.

“As compliance teams examine different securities, they will be able to delve into why ‘Pink-No Information’ securities have a higher risk,” he said. “Many tend not to have disclosures, have small market caps, or may have a promotion going on. This tool provides the ability to quickly analyze and assess all of these areas.”

Other key data points offered by Canari include penny stock status, caveat emptor, hot sector status (marijuana & crypto), promotion, shell risk, price & volume change analysis, and shares outstanding change analysis. It also includes quote and reference data on exchange-listed securities. OTC Markets also plans to expand Canari to include compliance data points on the small cap listed market, which Fuchs said will be added in the coming quarters.

OTC Markets is a content partner of Benzinga