Market Structure

The OTCQX, OTCQB and Pink markets represent U.S. and global public companies that are traded in the U.S. off the exchanges. Through our OTC Link ATS, investors in the OTCQX, OTCQB and Pink markets can buy and sell securities in an efficient manner, through the broker of their choice.

There are a few key differences between trading our securities and trading exchange-listed securities, which are explained here: Part 2 - Trading. The five major participants include:

• Companies

• Investors

• Broker-dealers

• Regulators

• Interdealer Quotation/Trading Systems (e.g., OTC Markets Group's OTC Link® ATS)

Each of these participants plays a role in providing information to the market, facilitating liquidity, and driving price transparency.

Companies develop public trading markets for their securities in order to raise capital, complete an acquisition or provide liquidity for existing shareholders to exit their investments.

Companies that qualify and are current in their financial disclosure may choose to apply to OTC Markets Group's best market, OTCQX. These companies have the highest average market cap of all the OTC markets. Entrepreneurial and development stage companies that are current in their disclosure may trade on the OTCQB market. All other companies trade on Pink, which is the default market for broker-dealers who want to trade a security. There is a wide spectrum of securities that provide variable reporting on this market.

Investors that trade in our markets vary in their knowledge and experience, from large institutional money managers to high-net worth individuals and other retail investors. OTC Markets Group provides certain investor relations services to all companies so that they can make their financial and other corporate disclosures readily and widely available to investors. OTC Markets Group distributes market data and company information on our website and through our data feeds.

Retail investors must execute their transactions (buy and sell orders) in OTCQX, OTCQB and Pink securities through a FINRA-registered broker-dealer. More information on trading is available in Part 2 — Trading.

FINRA registered broker-dealers may participate in the market representing client orders and acting as market makers. Broker-dealers may earn revenues from commissions charged on orders or from internalizing transactions. A market maker stands firm to execute orders at their published quotation and may invest its own capital to provide liquidity to an order. Market makers are also obligated to display eligible limit orders that are not marketable and provide best execution for customer orders.(see FINRA Rule 5310 on Best Execution and Interpositioning.) 'Best Execution' and other customer protection rules are discussed in more detail in Part 3 - Regulation.

The OTC Link ATS allows broker-dealers trading OTCQX, OTCQB and Pink securities to communicate and trade directly with one another. In order to notify other broker-dealers that they are willing to trade an OTC security at a particular price, broker-dealers post their quotes on OTC Link ATS. The aggregation and ranking of these quotes defines the market for a security, and the consolidation of the market's highest 'bid' (purchase price) and lowest 'ask or offer' (sale price) becomes the 'inside market.'

If a broker-dealer decides to trade a security, they can communicate with other broker-dealer(s), using OTC Link® ATS — OTC Markets Group's electronic messaging and trade negotiation system — or they may contact the broker-dealer through other means of communication and negotiate the trade.

The Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) regulate OTC Link® ATS, a trading platform operated by OTC Link LLC, a wholly owned subsidiary of OTC Markets Group. Companies with SEC-registered securities are regulated by the SEC. Similarly, broker-dealers who trade securities using OTC Link® ATS are FINRA members and SEC registered, and may also be subject to various state securities regulations.

Complaints regarding companies should be directed to the SEC, while complaints regarding broker-dealers or other investment professionals should be directed to FINRA. More information about specific OTC regulations is covered in Part 3 — Regulation.

Inter-dealer Quotation/Trading Systems allow broker-dealers to post and disseminate their 'quotes' (prices) to the market and, in the case of OTC Link® ATS, negotiate trades at agreed-upon prices. OTC Link® ATS allows broker-dealers to quote any OTC equity security eligible for quoting under SEC Rule 15c2-11. There are approximately 12,000 securities quoted on the OTC Link® ATS.

OTC Markets Group makes available and distributes market data to broker-dealers, investment professionals, market data re-distributors, and financial websites, in addition to providing data through www.otcmarkets.com.

The real-time dissemination of quote information along with the availability of company financials and news provides price transparency, which allows investors to analyze, value and trade a security. This continuous flow of information between participants defines efficient securities markets.