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Why Can't All Investors Trade Over-the-Counter Before the Market Opens? (OTCM)

June 17, 2013 1:59 pm
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Why Can't All Investors Trade Over-the-Counter Before the Market Opens? (OTCM)

Not all investors have pre-market access to stocks traded within OTC Markets Group’s (OTC: OTCM) (OTCQX: OTCM) three exchanges.

Some are only allowed to trade after the market opens. This has created a degree of frustration and confusion among those who assumed that investors were able to trade whenever they wanted.

According to Cromwell Coulson, CEO of OTC Markets Group, pre-market availability is determined by the brokerage firms.

“Pre-market trading is a game for sophisticated investors because there’s not as much liquidity, there’s not as much price formation taking place,” Coulson told Benzinga. “In many ways the pre-market trading is the market finding its price level. So many investors, and I think retail investors you’ll see as well, they actually wait for the open and then come and trade because they want to see the market develop.”

During the interview, Coulson also spoke about where OTC Markets Group is headed over the next few years.

“I think the biggest part for us is making sure our data is widely distributed so there’s comparable informational experience,” said Coulson. “The place where we’re really good at having our data is closer to where the trade execution decisions are made. The online brokers really care about showing the right information because people are making trading decisions.”

Coulson said that if a company makes investors dig around for information, traders will wonder if the firm is truly focused on serving the shareholders.

“[And] if an international company isn’t comfortable distributing their disclosure in the U.S., are there questions about their disclosure?” Coulson questioned.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ