Source: Ryan Allway, 420 Investor

OTC Markets Group Inc. (OTC: OTCM), operator of three over-the-counter equity markets, is tightening its reporting standards and eligibility requirements for venture-stage markets to crack down on scams and bolster transparency. On May 1st, the OTCQB will introduce a new minimum $0.01 bid price requirement and require CEOs and CFOs to certify that the company’s information is correct.

The minimum bid price requirement is designed to eliminate companies that use dilutive stock fraud schemes and promotions. Under these scams, companies will initiate a promotional effort while at the same time diluting shareholders by issuing additional shares onto the market. Stocks on the exchange must be quoted for at least $0.01 daily over a 30-day period or be dropped from the market.

In addition to these changes, the exchange will charge a one-time $2,500 fee for new applicants and an annual $10,000 fee for companies trading on its markets. Foreign companies listed on a qualified stock exchange and current on their U.S. reporting obligations will be permitted to trade on the OTCQB instead of only being allowed to trade on the OTC Pink – the company’s lowest tier exchange.

These new rules could affect a number of cannabis companies that trade on OTC Markets’ exchanges. Companies trading under $0.01 will be forced to undergo a reverse stock split or other means to increase their share price, while Canadian companies may now be able to up-list to the OTCQB. In the end, all of these efforts are a positive thing for shareholders and investors in the space.

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