On February 13, 2014, OTC Markets Group published proposed
amendments to the OTCQX Rules for U.S. Companies and OTCQX Rules
for International Companies. The OTCQX marketplace is the premier
tier of the U.S. over-the-counter markets operated by OTC Markets
Group and is a preferred alternative to trading on the U.S.
One of the most significant changes is the closer alignment of
the roles of the Designated Advisor for Disclosure (the
"DAD") for U.S. companies and the Principal American
Liaison (the "PAL") for international companies.
The OTCQX Rules require that every issuer be sponsored by either a
DAD or a PAL, which are approved third-party investment banks or
Another change is the adoption of comprehensive guidance for
U.S. companies with respect to the content and timing of news
releases about material developments. Among other things,
U.S. companies will be required to release both favorable and
unfavorable news in a timely manner and ensure that news is handled
in proper perspective. U.S. companies will be able release
this news through the OTC Disclosure & News Service
("DNS") or through a third-party newswire service that is
integrated with DNS.
International companies that are not subject to reporting
obligations with the Securities and Exchange Commission will now
also have available to them additional channels through which they
will be able to release news with respect to their ongoing
disclosure obligations. In addition to being able to make
news releases through DNS, these companies will now also be able to
make this disclosure through a third-party newswire service that is
integrated with DNS.
Additionally, securities of both U.S. and international
companies will no longer be required to be eligible for deposit
with the Depositary Trust Company (the "DTC"). DTC
provides trade settlement and securities depository services. This
rule change, however, will not affect Canadian companies that are
listed on the OTCQX, as Canadian companies have been exempted from
the DTC eligibility requirement since 2008.
Finally, OTC Markets Group is publishing a new set of rules
called OTCQX Rules for U.S. Banks. These rules have been
established for a new OTCQX Banks marketplace which will launch in
the spring of 2014. Banks that qualify under the new OTCQX
Rules for U.S. Banks will be included in the OTCQX U.S. Premier
tier on market data feeds and on OTC Markets websites.
The proposed rules are scheduled to become effective March 17,
2014, with the exception of the proposed rule requiring OTCQX U.S.
companies to make timely disclosure of material news
releases/developments in a press release, which will become
effective on May 17, 2014.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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