Stake Academy - OTC Stocks
The Grayscale Bitcoin ETF, Tencent and Porsche are just a few names now available as part of Stake's OTC offering. Find out more on how these non-exchange listed stocks work and how to get access.
What are OTC stocks?
Packed with multi-billion dollar global companies like Adidas and Nintendo, over the counter (OTC) stocks bypass the major US exchanges. Now, they are available to the Stake community.
Before going into the nitty-gritty mechanics of the stocks, how broad is the OTC offering? Stake has close to 100 new OTC stocks on the platform. Here’s the full list:
#Security | Name |
GBTC | Grayscale Bitcoin Trust |
ETHE | Grayscale Ethereum Trust (ETH) |
NLST | Netlist Inc |
RHHBY | Roche Holding Ltd Sponsored ADRs |
LWLG | Lightwave Logic Inc. |
ALPP | Alpine 4 Technologies Ltd. Class A |
DANOY | Danone SA ADRs |
ETCG | Grayscale Ethereum Classic Trust |
BNPQY | BNP Paribas SA Sponsored ADRs |
NGLOY | Anglo American plc Sponsored ADRs |
TSCDY | TESCO PLC S/ADR NEW |
IMPUY | Impala Platinum Holdings Limited Sponsored ADRs |
DTEGY | Deutsche Telekom AG Sponsored ADRs |
KGFHY | Kingfisher Plc Sponsored ADRs |
AKZOY | Akzo Nobel N.V. Sponsored ADRs |
AXAHY | AXA SA Sponsored ADRs |
BASFY | BASF SE Sponsored ADRs |
IMBBY | Imperial Brands PLC Sponsored ADRs |
JBSAY | JBS S.A. Sponsored ADRs |
IFNNY | Infineon Technologies AG Sponsored ADRs |
GDLC | Grayscale Digital Large Cap Fund LLC |
EXPGY | Experian PLC Sponsored ADRs |
BCHG | Grayscale Bitcoin Cash Trust BCH |
ADRNY | Royal Ahold Delhaize N.V. Sponsored ADRs |
ZURVY | Zurich Insurance Group Ltd Sponsored ADRs |
WMMVY | Wal-Mart de Mexico SAB de CV Sponsored ADRs Class V |
ADDYY | adidas AG Sponsored ADRs |
DLAKY | Deutsche Lufthansa AG Sponsored ADRs |
NHYDY | Norsk Hydro ASA Sponsored ADRs |
REPYY | Repsol SA Sponsored ADRs |
FSUGY | Fortescue Metals Group Ltd Sponsored ADRs |
JSAIY | J Sainsbury Plc Sponsored ADRs |
RDSMY | Koninklijke DSM N.V. Sponsored ADRs |
LTCN | Grayscale Litecoin TR LTC |
HEINY | Heineken NV Sponsored ADRs |
TCEHY | Tencent Holdings Ltd. Unsponsored ADRs |
LVMUY | LVMH Moet Hennessy Louis Vuitton SE Unsponsored ADRs |
CICHY | China Construction Bank Corporation Unsponsored ADRs Class H |
PROSY | Prosus Nv Sponsored ADRs |
AAGIY | AIA Group Limited Sponsored ADRs |
SIEGY | Siemens AG Sponsored ADRs |
SFTBY | Softbank Grp Unsp/Adrs |
IDEXY | Industria de Diseno Textil Inditex SA Unsp/Adrs |
EADSY | Airbus SE Unsponsored ADRs |
ALIZY | Allianz Se Unsp/Adrs |
NTTYY | Nippon Telegraph and Telephone Corporation Sponsored ADRs |
VWAGY | Volkswagen AG Unsponsored ADRs |
ENLAY | Enel SpA Unsponsored ADRs |
NPSNY | Naspers Limited Sponsored ADRs Class N |
SBGSY | Schneider Elec Unsp/Adrs |
RCRUY | Recruit Holdings Co Adrs |
IBDRY | Iberdrola SA Sponsored ADRs |
NTDOY | NINTENDO CO LTD Unsponsored ADRs |
ADYEY | Adyen N.V Unponsored ADRs |
PNGAY | Ping An Insurance (Group) Company of China Ltd. Sponsored ADRs Class H |
KDDIY | Kddi Corp Unsp/Adrs |
SHECY | Shin-Etsu Chem Unsp/Adrs |
RBGLY | Reckitt Benckiser Group plc Sponsored ADRs |
BAYRY | Bayer AG Sponsored ADRs |
GLNCY | Glencore Plc Unsp/Adrs |
LNSTY | London Stock Exchange Group plc Sponsored ADRs |
DKILY | Daikin Industries Ltd Unsp/Adrs |
ISNPY | Intesa Sanpaolo S.p.A. Sponsored ADRs |
LZAGY | Lonza Group Ag Unsp/Adrs |
FANUY | Fanuc Corporation Unsponsored ADRs |
NRDBY | Nordea Bank Abp Sponsored ADRs |
CMPGY | Compass Group Plc Sponsored ADRs |
VWDRY | Vestas Wind Sys Unsp/Adrs |
ENGIY | ENGIE SA Sponsored ADRs |
DBOEY | Deutsche Boerse AG Unsponsored ADRs |
CLPBY | Coloplast A/S Sponsored ADRs |
BYDDY | BYD Company Limited Unsponsored ADRs |
CTTAY | Continental AG Sponsored ADRs |
CKHUY | CK Hutchison Holdings Unsp/Adrs |
BACHY | Bank of China Limited Unsponsored ADRs Class H |
KAOOY | Kao Corp Unsp/Adrs |
PCRFY | Panasonic Corp S/Adrs |
LGRDY | Legrand Sa Unsp/Adrs |
MGDDY | Michelin Cie Gen Unsp/Adrs |
AMKBY | A.P Moller-Mrs Uns/Adrs |
UNCRY | Unicredito Spa Unsp/Adrs |
SCGLY | Societe Generale S.A. Sponsored ADRs |
KMTUY | Komatsu Ltd. Sponsored ADRs |
BAESY | BAE Systems plc Sponsored ADRs |
SVNLY | Svenska Handelsbanken AB Uns/Adrs |
NSANY | Nissan Motor Co Ltd Sponsored ADRs |
BDORY | Banco do Brasil S.A. Sponsored ADRs |
KNRRY | Knorr-Bremse Unsp/Adrs |
POAHY | Porsche Autombl Unsp/Adrs |
KKPNY | Royal KPN NV Sponsored ADRs |
ICAGY | International Consolidated Airlines Group SA Sponsored ADRs |
UBSFY | Ubisoft Entertainment SA Unsponsored ADRs |
AUOTY | Au Optronics Corp Adrs |
LRENY | Lojas Renner SA Sponsored ADRs |
CFRUY | Compagnie Financière Richemont SA Un/Adrs |
WNDW | Solarwindow Tech Inc |
Going deeper
Two major questions arise surrounding OTC stocks.
The obvious question. Without an exchange, how do these shares change hands? Such shares are traded through broker-dealer networks. Using an electronic network, scores of broker-dealers are posting stocks on offer. Trades are executed directly between the buyer and seller without the need for a 3rd party exchange to settle transactions.
A company called OTC Group runs such networks. Three marketplaces exist. Each OTC stock belongs to one of the following categories.
Best Market (OTCQX): The most stringent report requirements, such companies are generally multi-billion-dollar foreign companies that may have plans to eventually list on US markets. The majority of OTC stocks fall into the OTCQX category on Stake despite the fact only 4% of OTC stocks are in this tier. Stocks under US$5 in price are also ineligible for OTCQX trading.
Venture Market (OTCQB): The middle tier, these companies tend to be early-stage or developing.
Pink Sheets: Such companies have no US reporting requirements and don’t have to report to the SEC. While pink sheets may have a bad image, big names like Nintendo fit into the category. While the US regulators may not monitor such stocks, foreign regulators may. Stake only offers access to the highest quality pink sheet stock.
Why OTC?
Next, why would a company go OTC rather than on an exchange? In short, listing on an exchange is difficult and costly. For smaller companies, the millions needed to both list then comply with the yearly SEC and FINRA audits prices them out of the major exchanges.
For bigger companies, like the OTC stocks found on Stake, they are generally foreign ADRs. These companies are already listed on a local market and an OTC listing provides an easier option for foreign investors to access the stock. Or in the case of the Greyscale crypto ETFs, the SEC is yet to approve an ETF with crypto as the underlying asset. Such instruments make use of the OTC markets to avoid the SEC’s regulatory conditions.
A few things to consider
It’s important to recognise that OTC stocks tend to have lower liquidity. Entering and exiting positions may be more difficult if traders are looking to execute at specific prices. Lower liquidity is also associated with increased volatility.
Pay careful attention when placing orders to ensure you execute at your desired price. Read our Stake Academy on Order Types to understand how to best leverage market, limit and stop orders to execute trades.
Moreover, while the stocks available on Stake are high-quality OTC stocks, generally such stocks are subject to less regulation than their exchange-listed counterparts. Naturally, this leads to more risk.
How do I trade OTC stocks?
OTC stocks can be traded for $3 per trade on Stake Wall St. View OTC Disclaimers here.