Benefits to Investors
OTCEI offers the following benefits for investors:
1. Safety: OTCEI‗singless andr scrip less electronic trading ensure safety of transactions of the investor. For instance, every-OTCinvestor-Cardfree. Thiscode in a O is allotted on a permanent basis and should be used in all OTC transactions and applications of OTC issues. This card provides for the safety and security of the investors investments. The mechanism offers greater security to investors as the sponsors investigate into the company and the projects, before accepting sponsorship thus building up much needed greater investor
2. Transparency: OTC screens at every OTC counter display the best buy/sell prices. The exact trading prices are printed in the trading documents for confirmations. This protects the investor interest and there by minimize disputes.
3. Liquidity: A great advantage of the OTC is that the scrip‘stradedare liquid. This is because there are at least two market-makers who indulge in continuous buying and selling. This enables investors to buy and sell the scrip‘sany time.
4. Appraisal: OTC members sponsor each scrip listed in an OTC counter. The sponsor makes an appraisal of the scrip‘sforinvestor worthiness. This ensures quality of investments.
5. Access: Every OTC counter serves as a single window to the entire OTC exchange throughout the country and throughout the world too. Therefore, buying and selling may be resorted to from any part of the world. It offers the facility of faster deal settlement for investors across the counters spread over the entire country.
6. Transfer: It is important that OTC shares are transferable within 7 days, where the consolidated holdings of the scrip‘sdonotexceed 0.5 percent of the issued capital of the company.
7. Allotment: There is not much waiting for the investors when it comes to allotment of scrip‘s. Allotment is completed in all respects within a matter of 35 days and trading begins immediately thereafter.
8. Other benefits : a. Derivatives such as futures and options, forward contracts on stock, and other forms of forward transactions and stock lending are allowed on OTCEI b. Scrip less trading makes dealings simper and easier c. Market-making system in OTC Exchange gives sufficient opportunities for the investors to exit d. Acts as a benchmark to value securities e. Creating an exit option for illiquid stocks/venture capitalists f. Shuffling portfolios for the investors g. Organizing and broad-basing trading in the existing market.