#cross-trading

Kuala Lumpur, Malaysia – On October 31, 2023, a remarkable event brought together industry leaders and visionaries. OTC Markets, an U.S. marketplace for international companies seeking to access U.S. investors, hosted an event, aptly named “OTC Markets: Marketplace for International Companies to Access U.S. Investors.” As the first approved OTC Markets premium provider in Asia, Hexcellence Consulting jointly co-hosting and served as the prime sponsor for this occasion, alongside OTC Markets.

▲ Pathways for Companies Aiming to Enter the U.S. Capital Market

The event focused on three essential pathways for companies aiming to enter the U.S. capital market: Cross-trading, Initial Public Offering (IPO), and Reverse Takeover (RTO). Each of these pathways presents distinct opportunities and challenges for international companies looking to access the vast pool of U.S. investors.

Among the notable guests in attendance was OTC Markets’ Head of APAC Business Development, International Corporate Services, Catherine (Chao) Shang. Her presence underscored the significance of the event and the growing importance of the APAC region in the global investment landscape.

Hexcellence Consulting’s Managing Director, Seah Chia Yee, graced the event with his presence, reaffirming the firm’s commitment to providing advisory services for companies seeking to navigate the U.S. capital markets. He was accompanied by the firm’s Partner, Yee Chee Yong, and Dennis Loh Yee Nam, as well as thier core management team.

The event also welcomed representatives from various organizations, including Agape ATP Corp, Call W Berhad, Capitale Ventures Pte Ltd, Emergence Innovative Sdn Bhd, Esente Advisory, Fin8 Corporate Advisory Sdn Bhd, Gemilang Media Utama Sdn Bhd, Hampstead Pergola Capital Limited, Hueck Capital Sdn Bhd, Proneer Global Sdn Bhd, Vcorp Capital Sdn Bhd, WYNCORP Advisory Sdn Bhd, Zul Rafique & Partners, Marcum Asia CPAs LLP, FirstTrust China Ltd., Semenyih Eco Venture Resort & Recreation Sdn. Bhd., Integrated Gaming Platform, CSH Bakery & Confectionery Sdn Bhd, Sierra Pools, MRCB, and Primus Advisory.

▲ OTC Markets’ Head of APAC Business Development, International Corporate Services, Catherine (Chao) Shang

During the event’s opening speech, Ms. Catherine (Chao) Shang, shared insights on the advantages of Cross-Border Trading. She highlighted the cost-effectiveness of making shares publicly tradable in the U.S., with expenses as low as 1% of what an IPO would entail. This approach carries no additional legal risks, compliance burdens, or accounting complexities. Moreover, it enhances company valuation and trading liquidity while expanding the U.S. investor base.

Supporting these insights, data from the Oxford Metric Study provided convincing evidence for companies to explore Cross-Trading on OTC Markets. The study revealed a marked surge in share valuation within the OTC QX market and a substantial uptick in trading volume, both in the U.S. and the companies’ respective home markets. Furthermore, this strategy has proven to broaden the shareholder base and strengthen corporate presence in the U.S.

▲ Managing Partner of Hexcellence Consulting, Seah Chia Yee

Following Ms. Catherine (Chao) Shang’s enlightening speech, Hexcellence Consulting’s Managing Partner, Seah Chia Yee, took the stage to elaborate the processes and challenges associated with two other listing pathways: Initial Public Offering (IPO) and Reverse Takeover (RTO). He also pointed out the main differences between these approaches. Mr. Seah Chia Yee highly recommended Small and Medium Enterprises (SMEs) to consider uplisting to OTCQB and OTCQX. This strategic move can enhance liquidity and boost their visibility to a global investor audience, providing SMEs with a valuable opportunity for growth and success.

As a Southeast Asia consulting firm, our primary objective is to establish valuable connections between local businesses and the global financial market. Nestled in the heart of Southeast Asia, we’ve have witnessed the emergence of numerous promising companies venturing into the international financial arena. With our team of professionals, which includes legal experts, financial advisors, and communication specialists, we are fully confident in our ability to offer comprehensive assistance to these companies. Our mission is to guide them through the processes of listing and fundraising, supporting their growth and success in the global market.

▲ CEO, Director of Marketing & Founding Partner of Esente Advisory, Dr. Darren Wong

▲ Senior Partner of Marcum Asia CPAs LLP, Jason Tang

In the subsequent discussion, Dr. Darren Wong, the CEO, Director of Marketing, and Founding Partner of Esente Advisory, has emphasized the crucial role of investor relations (IR) for publicly listed companies. He made a simple yet essential point: companies that actively engage with their investors tend to see higher stock prices compared to those that don’t prioritize IR. Dr. Wong’s insights highlight how investor relations significantly impacts a company’s overall performance and success.

Next up, Jason Tang, a senior partner at Marcum Asia CPAs LLP, shared important insights about the difficulties companies face when trying to list on U.S. Capital Markets, especially in relation to accounting standards. Mr. Tang explained the complex challenges and problems that businesses encounter when they need to meet the strict U.S. accounting standards. This information sheds light on the crucial financial aspects that companies need to deal with when thinking about listing on these markets.

Overall, this event marks a significant advance in enhancing understanding and access to U.S. capital markets for international companies. It served as an active hub for knowledge exchange, fostering valuable connections and offering invaluable insights to all attendees.

PANEL SESSION

NETWORKING SESSION

On May 16, 2023, Techtronic Industries Co. Ltd. (“TTI” or the “Group”) (SEHK: 669, OTCQX: TTNDY, TTNDF) announced that it has qualified to trade on the OTCQX Best Market, upgrading from PINK market. This achievement sets a significant milestone for the company as it becomes the first Hang Seng Index company, with a market capitalization approximately of HK$ 20.4 billion, to voluntarily cross-trade in the OTC market.

By qualifying for the OTCQX Best Market, TTI has met rigorous financial standards, adhered to best practice corporate governance, and demonstrated compliance with applicable securities laws. These streamlined market standards enable the company to leverage its home market reporting, ensuring that its information is readily accessible to investors in the United States.

Mr. Joseph Galli, CEO of TTI, commented, “We are delighted to begin trading on the OTCQX market. Hong Kong remains the domicile of TTI’s primary exchange listing, but this new development will add greater liquidity to both our ordinary shares and our ADR program, while making the stock more accessible to a broader global investment community.”

Cross-Trading is an approach offered by OTC Markets that allows companies to enhance liquidity in both their domestic and international markets through cross-trading on the OTCQX or OTCQB platforms.

About TTI

TTI is a global leader in cordless technology, offering a comprehensive range of professional tools, DIY tools, and outdoor power equipment. The company’s portfolio includes renowned brands such as MILWAUKEE, RYOBI, AEG, EMPIRE, HOOVER, VAX, DIRT DEVIL, and ORECK. The group is founded in 1985 and listed on The Stock Exchange of Hong Kong Limited in 1990.

TTI is highly regarded in the industry and is a constituent stock of several prominent indexes, including the Hang Seng Index, Hang Seng Corporate Sustainability Benchmark Index, FTSE RAFITM All-World 3000 Index, FTSE4Good Developed Index, and MSCI ACWI Index. The company’s commitment to advancing cordless technology, coupled with its strong emphasis on environmental, social, and corporate governance standards, has propelled it to the forefront of its industries.

CSL Limited (ASX: CSL; OTCQX: CSLLY), a prominent global biotech company, has successfully transitioned from the Pink market to the OTCQX, enhancing transparency for U.S. investors. Upgrading to the OTCQX Market is a significant milestone, as it allows companies listed on qualified international exchanges through Cross-Trading to leverage their home market reporting to provide information to U.S. investors while adhering to streamlined market standards.

About CSL Limited

CSL, a global biotech leader, offers a diverse range of life-saving medicines for conditions like haemophilia, immune deficiencies, and influenza prevention. Through its three businesses, CSL Behring, CSL Seqirus, and CSL Vifor, the company delivers life-saving products to patients in over 100 countries, employing 30,000 individuals. Combining commercial strength, research and development focus, and operational excellence, CSL continually strives to innovate and empower patients to live their lives to the fullest.

Many global and Bursa-listed companies view their successful listing as a crucial accomplishment, but they may not be aware of the limitations of solely listing in their home market in Malaysia. These companies may not realize that American investors may be hesitant or unable to invest in foreign markets, and that the information they disclose locally may not be easily accessible in the US. To tap into the largest market for capital expansion and growth, the best approach is to Cross-Trading.

Access To U.S. Capital Markets Increasingly Important For Malaysian Issuers

Malaysian issuers recognize the importance of accessing the US Capital Markets to expand their investor base. Cross-Trading on a secondary market provides an efficient way for companies to establish a presence and attract US shareholders. US investors prefer to see quotes in US dollars during regular trading hours.

What Are The Benefits Of Cross-Trading in the U.S?

There are numerous benefits to Cross-Trading in the U.S:

  • Diversifying your shareholder base
  • Making your financial information, research, pricing and risk assessment more broadly available to U.S. investors
  • Appealing to those investors who prefer securities traded domestically in U.S. dollars
  • Enhancing visibility among broker-dealers by supporting broker and sell-side compliance

Synergies Create Opportunities For Enhanced Liquidity

Cross-Trading provides companies with reciprocal opportunities to improve liquidity in both their domestic and international markets.A recent study by Oxford Metrica found that companies experience a 26% increase in liquidity in their home market and a 67% increase on the OTC Market after joining the OTCQX Market. This provides a cost-effective alternative for international issuers to raise capital and increase global investor awareness.

Furthermore, a strategic alliance between OTC Markets Group and the Canadian Securities Exchange demonstrates the benefits of secondary trading on the OTCQX Best Market/OTCQB Venture Market, including greater access to financial information, increased global investing opportunities, and more efficient trading for investors and the broker dealer community.

Fundamentally, Cross-trading offers a turnkey approach for Malaysian companies, while also providing a valuable opportunity for international companies to expand their global reach and increase their access to capital. By bridging the gap between different markets, cross-trading can create opportunities for growth and expansion.