OTC market, regulated unofficial market, curb market, open market
In Germany, the exchange trading of securities which do not meet all the minimum requirements of the European Securities Services Directive (cf. § 57 BörsG) and which are therefore not admitted to unofficial trading or to the regulated market. – The Regulated Unofficial Market is thus a segment on German stock exchanges organized under private law. – Transactions are conducted by independent brokers (Freimaklern; curb brokers) and are subject to the supervision of the stock exchange management. However, over-the-counter securities are not subject to a disclosure requirement (ad hoc notification) pursuant to Section 15, Paragraph 1 of the German Securities Trading Act (WpHG). Nor is a sales prospectus required for admission to trading. – On German stock exchanges, admission to the Regulated Unofficial Market is generally not made at the request of the company wishing to issue shares, as is the case on the regulated market and in official trading, but on the basis of a trading need presumed by the free brokers. Thus, over-the-counter trading represents a market segment into which a company is brought rather than enters. – The Federal Financial Supervisory Authority has repeatedly pointed out dangers in over-the-counter trading. For example, stock corporations founded abroad – especially from the USA, Switzerland and Canada – have been included in the Regulated Unofficial Market on German stock exchanges. In the past, various stock exchange letters then recommended many of these companies for purchase. However, instead of the sustained price increase that investors had hoped for as a result, in most cases there was often a total loss within a very short time, because in many cases the company in question did not engage in any business activity at all apart from issuing shares. – See deterrence, regulatory, blog, stockbrokers, stock market segments, daimonion, derivatives transactions clearing obligation, derivatives transactions reporting obligation, dingo values, false advice, free brokers, secret tip, nonvaleurs, over-the-counter trading, pump and dump, scalping, segment binding, telephone order, unauthorized, Twitter, securities services directive, European, securities sales prospectus. – Cf. BaFin Annual Report 2007, p. 175 (marking OTC; investors should exercise particular caution with respect to OTC securities), BaFin Annual Report 2008, p. 156 f. (still high level of market manipulation in OTC), BaFin Annual Report 2009, p. 174 (reporting obligation for OTC securities since November 1, 2009), p. 176 (BaFin circular on reporting obligation), BaFin Annual Report 2010, p. 46 (monitoring of OTC derivatives), p. 194 f. (continuing very high level of market manipulation in over-the-counter trading), and the respective BaFin Annual Report, chapter “Supervision of Securities Trading and Investment Business,” Financial Stability Report 2011, p. 43 f. (intransparency of OTC trading in general and of over-the-counter derivatives markets in particular).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/