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Canadian companies flocking to U.S. OTC market

A cheaper and easier way to reach U.S. investors is drawing hundreds of Canadian companies to a U.S. market that avoids onerous American disclosure requirements.

In the past year, about 60 Canadian companies have joined trading on OTC Markets Group Inc.'s OTCQX market for international companies, OTC Chief Executive Officer Cromwell Coulson said on a recent swing through Canada.

That takes the total to about 210 from Canada, a list that includes Bombardier Inc. along with prominent international names such as BASF, Wal-Mart de Mexico, Repsol and easyJet. Peruse the companies on OTCQX and Canada pops up more than most any country as a place of origin thanks to the surge in Canadian companies joining.

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OTCQX International is a market for non-U.S. companies that are listed on international exchanges. The key difference from a listing on a U.S. exchange is the companies need not meet U.S. disclosure requirements, instead providing home country disclosure. That's a significant savings, as much as $20-million for a company such as German chemical maker BASF, which moved from the New York Stock Exchange, Mr. Coulson said.

Canadian companies don't save as much, because their compliance is already closer to that of the U.S. That also makes them more open to OTCQX.

"Canadian companies are the most comfortable coming to the U.S. and quality of disclosure is the most comparable," Mr. Coulson said.

He said that some companies in Canada are still not satisfied that by listing in Toronto alone, that they are accessible enough to U.S. investors. Volumes on OTCQX have proven significant, with Bombardier trading almost 150,000 shares on a recent day.

"The TSX should be the most accessible for U.S. investors but moving across the border is still tough."

Some of the most recent additions from Canada include Pure Multi-Family Real Estate Investment Trust, which joined just this week, and Spyglass Resources Corp., an intermediate oil and gas company based in Calgary.

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