OTC Markets Group, operator of financial markets for 10,000 U.S. and global securities, recently added “Hot Sector” information to their OTC Compliance Analytics product – to help compliance teams and broker-dealers make informed decisions related to these emerging sectors.
The release of “Hot Sector” information (Cannabis, Cryptocurrency/Blockchain) to its OTC Compliance Analytics product builds upon efforts to provide market professionals and investors with increased market transparency and disclosure.
The new data set identifies securities in the cannabis and cryptocurrency/blockchain sectors, making it easier for investors to quantify the risk associated with those securities. It’s the third data set that was added to the Compliance Analytics product in 2018, after stock promotion and shell risk flags were added earlier in the year.
“In the past quarter, the focus has really been on cannabis since Canada legalized recreational marijuana. A lot of these companies are moving up to the exchanges, and broker-dealers are looking for a more automated way to track these securities,” said Matthew Fuchs, executive vice president of market data and strategy at OTC Markets Group. “We started monitoring this trend and tagging issuers that we identified in these respective sectors and heard from customers that this information would be helpful to them.”
The Compliance analytics field has grown over the past several years, as risk management teams and compliance departments wrestle with how to analyze a perpetually growing mountain of new data. Any tool that can help make that process easier is useful, and, according to Fuchs, that’s what they’re trying to do. OTC Markets’ Compliance Analytics product now includes 19 different signals.
“The main feedback we received is around the quantification of risk and how we’re evaluating different categories to synthesize this information for compliance personnel,” he said. “Given the massive amount of data, we’ve been able to simplify a portion of it, so they can perform more diligence from a compliance perspective.”
“It speaks to our larger goal which is to use data to help broker-dealers and wealth management firms understand the OTC market and provide the tools needed to simplify and automate their processes.”