OTC Markets CEO: “Capital Formation Is Broken” | Cromwell Coulson

Cromwell Coulson argues that OTC Markets is best understood as market infrastructure for transparency, liquidity, and capital formation rather than as a place where “bad” stocks trade. He says the firm serves broker-dealers, investors, and issuers, with market data and issuer disclosure as central products, and he pushes back on the idea that the over-the-counter market is synonymous with stock promotion or fraud. He also notes that many notorious promotional schemes were actually on Nasdaq, not the pink sheets, and says OTC’s flag system is meant to warn investors without stopping trading.

The episode’s biggest policy theme is that capital formation for smaller public companies is “broken.” Coulson says the SEC’s modernization proposal could matter because it would preempt state blue-sky rules for SEC registrations and extend ATM offerings to OTCQX and OTCQB issuers for the first time. He argues that would make public markets more useful for companies that are too small for major exchanges but still want efficient access to capital.

Coulson also explains OTC Markets’ tiering system, from OTCQX down to the Expert Market, as a spectrum of disclosure and investor access. He says the business is run on a “Costco model” with lower margins than exchanges, and he closes by saying tokenization is real but likely to become plumbing rather than a replacement for traditional market rails.