Over-the-counter (OTC) shares, long dominated by retail investors, are attracting unprecedented interest, with turnover reaching a record $548 billion by the end of September, up from $445 billion for the whole of last year, according to OTC Market Group (OTC Markets Group).
This surge is partly due to the boom in cryptocurrencies. In addition to low-priced stocks, the OTC market also includes non-traditional securities such as grayscale bitcoin trusts (GBTC), a popular way to invest bitcoin through stocks, which is liked by people such as US star fund manager Cathie Wood.
GBTC has become the most popular over-the-counter securities this year.
With the OTC market booming, the Securities and Exchange Commission (SEC) is working to promote investor protection in an area notorious for fraud and inflated shipping scams. In September, the agency introduced a new rule that could delist as many as 2000 low-priced stocks that do not disclose financial information.
"this is a huge step forward," said Josh White, a professor at Vanderbilt University and a former SEC researcher who studies low-priced stocks. If the company does not provide the minimum basic information disclosure. It is impossible for investors to assess [a company's] cash flow very well. "
He added: "the information asymmetry between investors and insiders or fraudulent schemers is the time to commit fraud."