OTC Markets Group Inc.

Good morning and welcome to the OTC Markets Group Second Quarter 2021 Earnings Conference Call. I would now like to turn the conference over to Mr. Denzin, so you may begin.

Thank you, operator. Good morning and welcome to the OTC Markets Group Second Quarter 2021 Earnings Conference Call. With me today are Cromwell Coulson, our President and Chief Executive Officer, and Antonia Georgieva, our Chief Financial Officer. Today's call will be accompanied by a slide presentation. Our earnings press release and the presentation are each available on our website. Certain statements during this call and in our presentation may relate to future events or expectations, and as such, may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning risks and uncertainties that may impact our actual results is contained in the risk factors section of our 2020 annual report, which is also available on our website. For more information, please refer to the Safe Harbor Statement on slide three of the earnings presentation. With that, I'd like to turn the call over to Cromwell Coulson.

Cromwell Coulson Thank you, Dan. Good morning, everyone. Thank you for joining us today. I would like to begin by expressing my admiration for the incredible work by our team this quarter. I remain extremely proud of our colleagues' commitment to our values and operational excellence. Their dedication to serving our clients, improving our systems, and staying connected has delivered outstanding results for our shareholders. We continue to work towards bringing our team back together in person while prioritizing our colleagues' safe return to work. Our goal remains to inspire individual contributions, foster productive collaboration, and most importantly, maximize our collective success. Our results this quarter and for the first half of 2021 reflect the dedication of our people and our ability to provide dynamic solutions for our clients in a rapidly changing environment. we have experienced increased demand for our products and services across business lines, which in turn led to record financial results. Gross revenues grew 49% and net income grew 67% compared to the second quarter last year. As a result, our earnings per share and operating profit margin also experienced significant expansion. Antonia, will cover our financial results in more detail in a few moments. With the SEC's amended Rule 15 compliance date quickly approaching on September 28th, we have also been preparing for the increased responsibilities in our role as a well-regulated market operator. Building a strong regulatory foundation as a qualified interdealer quotation system under the rule will support our future ability to enhance the value of our markets for public companies, bring efficiencies to broker-dealer trading processes, and digitalize useful data for investors. Trading volumes remained robust during the second quarter, and we are pleased to report another quarter of providing reliable, consistent service to our broker-dealer subscribers. The secure, compliant, and effective operation of our regulated ATS systems is a collaborative team effort. We have to earn our subscribers' trust each new trading day. Our focus on serving subscribers and keeping our markets running underpins our mission to create better informed and more efficient financial markets. We serve that mission through our complementary business lines. We deliver mission-critical market infrastructure for broker-dealers. We bring the benefits of public trading to a broad spectrum of securities, and we efficiently fulfill the capital formation needs of a diverse range of U.S. and global companies. We continue to invest in our people and platform to increase earnings power for shareholders in the years to come. Throughout the first half of the year, we have discussed the creation of a third ATS named OTC Link NQB. We are excited to introduce this ATS as a fully attributable interdealer quotation system with matching engine functionality. The addition of OTC Link NQB complements our existing regulated ATSs and allows our subscribers to choose the market model that best serves their clients' trading needs. We expect OTC Link NQB to be operational during the third quarter, and I look forward to discussing that along with other market enhancements in the future. Our corporate services business, achieved a major milestone this quarter, surpassing 500 companies on the OTCQX market. This journey began with just 10 founding companies and now includes a diverse range of industry leaders, innovators, and emerging companies, which represent 24 countries across the globe. It has been a privilege to become the market of choice for these groundbreaking public companies. We thank you all for your support of the OTCQX market as we continue to build this market. Our OTCQB venture market finished the quarter with over 1,000 companies, further showcasing the value of our data-driven market standards and technology platform. During the second quarter, we also saw a significant increase in the number of companies seeking to use our disclosure and news service to disseminate current public information in large part driven by the upcoming changes to Rule 15 C-211. This level of increased interest in our markets reinforces the vital role we play as a global gateway for companies to access the U.S. market in an efficient and cost-effective manner. Our market data licensing business also experienced strong results during the second quarter, continuing to build from the broader interest and participation in our markets. We continued to expand our reach by adding distributors internationally, and our enhanced compliance data is providing value throughout the industry. Working together, our business lines provide a dynamic platform, allowing public companies to engage with their investors and demonstrate compliance with securities laws, providing efficient trading and improving compliance processes for broker-dealers. On the regulatory front, we are focused on implementing changes related to the SEC's amended Rule 15-C-211. The rule's compliance date arrives in less than two months from today. We remain engaged with the Commission and SEC staff to ensure an efficient industry-wide rollout of the new standards this September. During the quarter, we conducted broker-dealer, issuer, and investor-focused webinars and published additional material describing this important change. Earlier this week, the SEC staff released a notice indicating that the SEC chair does not intend to move forward with the proposal to create an expert market operated by OTC Link. This means securities of issuers that do not comply with the rules disclosure requirements will not have proprietary market maker quotes in our expert market. No information stocks will still fall to our expert market after the compliance date and will be available only for unsolicited quotes from broker-dealers representing limit orders of investors not affiliated with the issuer. It is important to note that while the new rule will prohibit broker-dealers from publishing proprietary quotations in securities that do not provide adequate current information, there are no reductions in FINRA best execution obligations or restrictions in the rule on broker-dealers trading those securities as an agent or principal. As we enter the second half of 2021, we remain well positioned to execute on our three primary strategic initiatives this year. First, we must successfully implement changes related to amended Rule 15C-211. The rule offers us an exciting opportunity to enhance the level of disclosure available for investors, create efficiencies for broker-dealers, and bring more companies public onto our markets. Second, we will remain laser-focused on improving the functionality and ensuring the reliability of our trading systems. The increased trading volumes and innovation in our markets provide opportunities for continued growth, and we must continue to deliver reliable, compliant, and efficient trading systems. Finally, we must support the growing number of issuers that rely on our OTCQX and OTCQB markets to inform their investors, be efficiently traded by broker-dealers, and demonstrate compliance with securities regulations and good corporate governance. In closing, I am pleased to announce that on August 2nd, our Board of Directors declared a higher quarterly dividend of 18 cents per share, payable in September. This dividend, which is an increase of 20%, reflects our ongoing commitment to providing superior shareholder returns. With that, I will turn the call over to Antonia.