# Understanding OTCQX: Top Tier of OTC Markets and Stock Criteria

## What Is the OTCQX?

The OTCQX is the top tier of the three marketplaces for the [over-the-counter](https://www.investopedia.com/terms/o/otc.asp) (OTC) trading of stocks, provided and operated by the [OTC Markets Group](https://www.investopedia.com/terms/o/otc-markets-group-inc.asp). It lists global blue-chip stocks and requires stricter qualification criteria, including governance transparency and SEC compliance, compared to the other tiers, which are the [OTCQB](https://www.investopedia.com/terms/o/otcqb.asp)/OTCBB and the Pink Sheets. The OTCQX also offers trading advantages like real-time quotes and market depth for investors.

### Key Takeaway

*   The OTCQX is the highest tier of the OTC markets, offering trading for companies not listed on traditional exchanges.
*   Companies on the OTCQX must meet high financial standards, transparency, and regulatory requirements, excluding penny stocks and shell companies.
*   The OTCQX market is managed by OTC Link, an electronic system registered with the SEC as a broker-dealer and alternative trading system.
*   Listing on the OTCQX allows prestigious companies to avoid high costs and strict disclosure requirements of major exchanges.
*   Investors in the OTCQX can access real-time quotes and benefit from protections similar to those in exchange-traded securities.

## How OTCQX Facilitates Stock Trading

The OTC market is decentralized where dealers trade [securities](https://www.investopedia.com/terms/s/security.asp) not listed on major exchanges. Instead of providing an order matchmaking service as with the NYSE, these dealers carry inventories of securities to facilitate any buy or sell orders. [Penny stocks](https://www.investopedia.com/terms/p/pennystock.asp), [shell companies](https://www.investopedia.com/terms/s/shellcorporation.asp), and companies in bankruptcy cannot qualify for a listing on the OTCQX.

The OTCQX Best Market features many [blue-chip](https://www.investopedia.com/terms/b/bluechip.asp) stocks from Europe, Canada, Brazil, and Russia. These large foreign stocks are frequently global household names.

## Compliance and Regulation for OTCQX Listings

 OTCQX companies must meet transparency standards and exclude those linked to stock [promoters](https://www.investopedia.com/terms/p/promoter.asp) or dubious practices. The OTCQX sets standards that a company must meet for inclusion. Companies must meet financial standards, stay current in disclosures, and have a third-party advisor. Listed companies report to a U.S. regulator such as the [Securities and Exchange Committee](https://www.investopedia.com/terms/s/sec.asp) (SEC) or the [Federal Deposit Insurance Corporation](https://www.investopedia.com/terms/f/fdic.asp) (FDIC).

The OTCQX marketplace is run by OTC Link, an electronic inter-dealer quotation and trading system developed by OTC Markets Group. OTC Link is registered with the SEC as a [broker-dealer](https://www.investopedia.com/terms/b/broker-dealer.asp) and also as an [alternative trading system](https://www.investopedia.com/terms/a/alternative-trading-system.asp) (ATS). OTC Link enables broker-dealers to not only post and disseminate their quotes, but to also negotiate trades through the system’s electronic messaging capability. This feature replaces the OTCBB, which was only a quote system.

The OTCQX Marketplace benefits [investors](https://www.investopedia.com/terms/i/investor.asp) by highlighting superior companies over financially troubled or questionable ones. Investors can engage with foreign blue chips and view real-time Level 2 quotes with detailed market data.

All broker-dealers that trade OTCQX, [OTCQB](https://www.investopedia.com/terms/o/otcqb.asp), and [OTC Pink](https://www.investopedia.com/terms/o/otc-pink.asp) securities have to be [Financial Industry Regulatory Authority](https://www.investopedia.com/terms/f/finra.asp) (FINRA) members. Further, they must register with the SEC and are subject to state securities regulations.

In this way, as with exchange-traded securities, investors trading OTC securities are protected from an unethical broker-dealer’s illegal practices by the same SEC and FINRA rules such as [Best Execution](https://www.investopedia.com/terms/b/bestexecution.asp), Limit Order Protection, Firm Quotes, and Short Position Disclosure.

## Exploring OTCQX Tiers: From U.S. Premier to International

The reason large and prestigious companies list on the OTCQX rather than on a major exchange, such as the [NYSE](https://www.investopedia.com/terms/n/nyse.asp), is mainly to avoid the high costs associated with listing shares. They also save on costs tied to strict disclosure and legal requirements. The OTCQX application fee for eligible international and U.S. companies is much lower.

U.S. companies need to meet extra requirements to list on the OTCQX U.S. Premier Tier. Requirements include a $1 minimum [bid price](https://www.investopedia.com/terms/b/bidprice.asp) for 90 days and meeting [Nasdaq](https://www.investopedia.com/terms/n/nasdaq.asp) Capital Market criteria.

The Premier Tier is designed to identify large, high-quality issuers that would qualify to list on a national stock [exchange](https://www.investopedia.com/terms/e/exchange.asp). The comparable OTCQX International Premier tier is for foreign companies that meet specific qualifications of the NYSE’s worldwide standards.

While stocks trading on the OTCQX have many of the same protections as more established, larger stocks, they are still considered to be speculative. There is also no guarantee that any item trading here will be of higher quality than stocks trading on other over-the-counter tiers, or even another OTC marketplace. As such, traders would be well served to implement robust [due diligence](https://www.investopedia.com/terms/d/duediligence.asp) before committing their [capital](https://www.investopedia.com/terms/c/capital.asp).

## The Bottom Line

OTCQX is the top tier of OTC markets, offering a platform for trading over-the-counter stocks under strict criteria and SEC oversight, excluding penny stock. It features many global blue-chip companies and appeals to firms seeking lower costs than major exchanges like the NYSE. While it provides greater transparency and compliance, OTCQX stocks remain speculative, so investors should conduct thorough due diligence before trading.  

> **Article Sources**
>
> 1.  OTCMarkets. "[OTCQX](https://www.otcmarkets.com/files/OTCQX_The_Cost_Effective_Way_to_Access_the_US_Capital_Markets_for_International_Companies.pdf)."
>     
> 2.  U.S. Securities and Exchange Commission. "[Over-the-Counter Market](https://www.sec.gov/divisions/marketreg/mrotc)."
>     
> 3.  OTCIQ. "[OTCQX U.S. Fact Sheet](https://www.otciq.com/content/doc/otcqx/us.pdf)."
>     
> 4.  EMCO Hanover Group. "[OTCQX Requirements & Fees](https://www.emcohanover.com/OTCQX-reqs-fees.html)."