The Depository Trust Company (DTC) effectively controls
which public companies' stock can be traded electronically as opposed to
exchanging actual stock certificates when sales take place. A company must
apply to DTC to obtain this ability. Higher exchanges such as Nasdaq and NYSE
AMEX require DTC eligibility, lower platforms such as the OTC Bulletin Board
and those run by OTC Markets do not.
In recent years a number of small cap players have
suggested that DTC was intentionally denying eligibility to over the counter
stocks for no apparent reason. The SEC has looked into this somewhat and DTC
denies the allegation, claiming companies simply did not complete paperwork or
something. I have personally witnessed anecdotal evidence of DTC requesting
things that are next to impossible to produce in order to obtain or retain
electronic trading eligibility.
I will save the commentary on this for another day. But
in the meantime, be aware that smart shell players have now added an item to
their list of questions to ask when looking at a shell that trades: is it DTC
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hanks to provide this useful information DTC eligibility