Thank you, Operator. Good morning and welcome to the OTC Markets Group third quarter 2020 earnings conference call.

With me today are Cromwell Coulson, our President and Chief Executive Officer; and Bea Ordonez, 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 2019 Annual Report and our quarterly report for the first quarter of 2020, which is also available on our website.

For more information, please refer to the Safe Harbor statement on Slide 3 of the earnings presentation. With that, I’d like to turn the call over to Cromwell Coulson.

Thank you, Dan and good morning, everyone. Thank you joining us today.

I hope all of you and your loved ones are healthy and safe. As we look back at another quarter in the midst of a global pandemic and discuss our plans, I want to once again recognize the commitment and dedication of our colleagues at OTC Markets.

Our team continues to operate largely remotely with a small group of key roles in the office each day. Throughout this volatile year, our people have risen to the challenge, delivered excellent service and connected more deeply with our markets and our clients to our entire team.

Thank you for your dedication and performance this year. We are fortunate that our industry has been able to safely keep financial systems operating and capital flowing during a time of global turmoil.

Access to capital across all markets has helped investors and companies meet their immediate challenges and adapt to a fast changing future. At OTC Markets Group, we remain well position to seize business and regulatory opportunities in the short and long term.

We stand ready to address these unprecedented challenges, while remaining true to our core values and executing on our strategic priorities. As we have noted throughout the year, our framework for managing through this challenging environment is grounded in four key principles, supporting our colleagues and prioritizing their safety and well-being, continuing to serve our subscribers and our customers, ensuring that we take the measures necessary in the short term to protect our current operations and remain financially strong and remaining focused on the critical long-term strategic initiatives that position our business for future growth.

Our most recent quarterly report and earnings release presents our third quarter results in the context of broader global events, including the pandemic and this framework. We had a very strong third quarter with gross revenues growing 13%.

Continued volatility in the U.S. equities market led to another quarter of record trade volumes on our OTC Link ECN, driving much of the growth for this transactional business.

Our subscribers rely on us as they manage their own fast changing business requirements. And we understand that system reliability remains paramount.

Our markets must remain open and available. And I'm pleased to report that we once again met this challenge during the quarter.

It is a collaborative team effort that we are focused on delivering every trading day. Our success in the short term has not interrupted our focus on longer term goals.

Our subscribers and market participants expect and deserve an innovative market with services, data and technology that supports their evolving needs. With that in mind, our management product design and engineering teams continue to enhance our technology platform, and that in turn, provides the backbone for our future growth and productivity.

As we anticipated, our corporate services business line has continued to feel the most acute effects of the COVID-19 pandemic. After a fairly significant dip in sales in early 2020, a rebound in activity during the third quarter has brought corporate services revenues back to roughly flat through the first nine months as compared to last year.

We believe the recent sales growth may set the tone for a strong finish to the year for corporate services. Interest in our OTCQX and OTCQB markets reinforces the important role we play in providing an efficient, cost effective way for companies to access the benefits of a public market.

Increased use of our virtual investor conferences this year highlights the immense value of our ability to keep people connected. Companies and investors have strengthened existing bonds and form new relationships over our big platform.

At a time when opportunities for networking and interpersonal discussion are at a premium, now more than ever, we embrace our strategic vision for a future that is online data driven and social. Our market data licensing businesses continued its robust growth during the third quarter, driven by a combination of price increases and user growth.

During the year, we have introduced enhanced functionality and datasets, as well as several new products. In the second quarter, we announced a new hot sector designation for companies engaged in activities related to COVID-19 and added a quantitative risk scoring metric to this robust data set that covers a wide range of NASDAQ, NYSE and OTC securities.

Most recently, in September, we launched our Blue Sky Data Product, which provides a comprehensive view of compliance data on State Blue Sky secondary trading rules for more than 16,000 OTC equity securities, and 8,000 OTC corporate fixed income securities. Broker dealers can use our Blue Sky data to streamline automate compliance with state securities laws for secondary trading.

This data driven automated approach will make trading more efficient and improve Blue Sky compliance for public companies and broker dealers. On the regulatory front, in September, the SEC issued its final rule adopting amendments to Exchange Act rule 15c2-11.

The SEC staff was thoughtful and pragmatic in using the comment period to improve the rule. We continue to work with the Commission and the SEC staff to refine the rules practical application and gained several important exemptions.

The compliance date for the new rule is September 26, 2021. We have much to do in the coming months.

The final rule includes several positive aspects. Most importantly, allowing the industry to rely on our determination as a qualified inter-dealer quotation system as to whether a company qualifies for initial or ongoing quoting.

This new regulatory recognition gives us greater responsibility over our markets. Under the amended rule, we will be able to one streamline the onboarding of securities onto our markets; two, relieve broker dealers of the obligation to independently review company information; and three, be relied upon as the record keeper for ongoing issue or disclosure.

We have advocated from the beginning in practice, this rule should protect the property rights of minority investors, allow sophisticated investors to continue to efficiently access opportunities, and let broker dealers provide the best executions for investors. We are committed to working with the SEC on a potential expert market that would provide an electronic market for brokers and other sophisticated investors to continue interacting with the market while restricting quotation information from retail investors and the general public.

We are seeking other exemptive relief to streamline and simplified continued public quoting for certain categories of lower risk securities. In summary, the 15c2-11 rule modernization offers us an exciting opportunity to bring new companies to the public markets, enhance the level of disclosure available for investors and create efficiencies for broker dealers.

We also remain engaged with the SEC FINRA and others on the ongoing implementation of the Consolidated Audit Trail or CAT. The CAT reporting contract was created for exchange listed securities.

We will continue to advocate for a CAT reporting framework that better aligns with OTC market structure and market maker message workflows. We are committed to providing our regulators with the information they need in an efficient and understandable format.

To close a busy regulatory quarter, in late September, FINRA filed a rule that would allow it to cease operating the OTC bulletin board, while expanding their oversight of regulated inter-dealer quotation systems, primarily OTC link ATS, we support FINRAs desire to retire the OTCBB, and focus on being a pure SRO. We believe the adoption of this rule will present opportunities to further reduce regulatory inefficiencies and enhance the integrity of the OTC equity markets.

As we move into 2021 and acquire new responsibilities, we will continue to advocate for the thousands of smaller and international companies that rely on our markets, as well as the broker dealers that keep capital flowing. This work is core to our mission to create better informed and more efficient financial markets.

Finally, I'm pleased to announce that on November 9th, our Board of Directors declared a special dividend of $0.65 per share, and a quarterly dividend of $0.15 per share, each payable in December. These dividends reflect our ongoing commitment to providing superior shareholder returns.

With that, I will turn the call over to Bea.

Thank you, Cromwell, and thank you all for joining the call today. I want to start by commencing the efforts of the OTC Markets team.

All the teams have worked tirelessly during these difficult times to continue to support our clients and subscribers. I will now spend a few minutes reviewing our results to the third quarter of 2020.

Any reference made to prior period comparatives refers to the third quarter of 2019. As we review our financial results, I will endeavor to provide additional color related to how the difficult macroeconomic environment has affected our third quarter results and how it could effect on our future performance.

For the third quarter of 2020, we grew gross revenues by 13%. In the aggregate, the current challenging business climate did not have a material adverse effect on our third quarter performance.

In our trading business, continued volatility drove strong growth in transaction based revenue. In our market data business, the impact of price increases introduced at the beginning of the year, as well as gross and subscribers drove significant quarter-over-quarter revenue gains.

After a couple of difficult quarters, our corporate services business saw a strong recovery in sales and delivered modest quarter over quarter revenue growth. We remain well positioned to continue to invest in our business and to prudently deploy capital and resources to enhance our product suite, add subscribers and grow the number of issues on our markets.

With that said, considerable uncertainty still exists and it is possible that our operations and financial results in the coming quarters could be impacted by the unfolding pandemic and a further deterioration in global macroeconomic conditions. Turning now to our individual business lines.

OTC Link revenues were up 28%. We continue to see a very active trading environment throughout the third quarter.

This combined with the impact of additional subscribers’ onboarded over the past several quarters drove an increase in our quarterly ECN revenues of 159%. We have continued to see very elevated trading volumes in October and into November.

And in the near term, it is likely that our OTC link business will benefit from the increased trading volumes we're seeing in U.S. equity markets more generally.

Over the longer term, a prolonged downturn in economic activity or a more bearish market environment could depress trading activity and adversely affect our subscribers and in turn our trading revenues. Revenues from our market data licensing business were up 18%.

Revenues from professional users licenses were up 20%, reflecting pricing increase introduced at the beginning of the year and a 7% quarter over quarter increase in the ending number of users. Revenues from nonprofessional licenses were up 64%, reflecting a 45% quarter over quarter increase in the ending number of users.

Since March 31, 2020, we've seen the number of non pro users grow by 72%. We continue to deliver revenue gains from our suite of compliance offerings, a result of continued growth in the number of subscribers.

We have devoted significant resources to enhancing our product suite and growing that subscriber base. As Cromwell noted, in September, we launched our Blue Sky data product, a premium product that reduces risk and streamline compliance for market participants.

We hope to begin onboarding subscribers in the fourth quarter. Looking ahead, if there is a further or more prolonged deterioration in the macro climate, it is likely that existing market data subscribers could look to curtail their spending or cancel services.

As market conditions normalize, we might also expect to see some pullback in the number of professional and non-professional uses of our data. Our corporate services business grew revenues by 1%; revenues from our OTCQX market were down 2%, reflecting a small decline in the average number of companies on the market during the quarter.

We saw a significant slowdown in sales in the first six months of the year. However, we saw signs of recovering in the -- last recovery in the latter part of the second quarter.

And then the third quarter we saw a significant rebound in sales, with 44 QX joints up from 31 sales in the prior year quarter. We ended the quarter with 441 companies on the market, up slightly versus the 436 companies as at the prior year period.

We have continue to see contraction in the number of companies on our OTCQB market and in the current quarter it drove 4% decline in revenues. As previously noted relatively slower sales in 2019, drove a modest contraction in the number of companies at the beginning of 2020, a significant drop in first quarter sales drove a further decline.

Again, we sort of rebound in sales in the second quarter, actually outperforming the prior quarter and this trend continued into Q3 with 62 QB sales up from the 53 sales recorded in the prior quarter. Further, we have seen an improvement in voluntary non-renewal rates during the current quarter.

Year to date, our non-renewal rates are broadly in line with the prior year today. In short, across our corporate services business, we continue to see encouraging trends in terms of new sales and assure engagement and have a strong pipeline of prospects.

In September, we announced that we will be raising annual fees for our QX market effective for the 2021 annual subscription period, the first such rates since 2016. We also announced that we will be raising fees on our QB market again effective for companies joining or when renewing services on/or after January 1st, 2021.

This represents the first increase in our QB fees since 2018. Companies on our QX market choose to renew their services on a calendar year basis.

While companies are QB market renew on the 6 or 12 month anniversary of their date of join. Historically, we have seen that the vast majority, more than 90% of the companies on our markets choose to renew at the end of their service terms.

However, it is possible that the current difficult market conditions or a further deterioration in the business climate could result in an increase in our non-renewal rates in future quarters. Turning now to expenses.

On a quarter over quarter basis, operating expenses increased by 7%. The primary driver was an 8% increase in our compensation costs.

Reflecting the impact of increased headcount, annual salary raises awarded, as well as an increase in cash incentive comp accrued in respect of 2020, and an equity-based compensation expense. With revenues growing at 13% and expense growth contained at 7%, we delivered 16% quarter over quarter growth in income from operations, while net income for the quarter increased by 11%.

In closing, we've continued to work diligently to efficiently serve the 1000s of subscribers and issuers that rely on our public markets. We were pleased to report strong earnings growth and we remain focused on delivering for all of our stakeholders.

With that, I would like to thank everyone for their time and pass it back to the operator to open up the line for questions.

Thanks for taking my questions. Nice quarter.

I was wondering if you could want to start off around the 15, CTO 11. Is that the best possible outcome for you?

I know you put a lot of hard work into that, and maybe just -- maybe elaborate a little bit more on that? Thank you.

Sure Chris. And thanks for the question.

So it's a pretty good outcome. We spent a lot of time I think even talking about it on these calls, when the proposed rule came out, what we thought this was going to do for us and to the market.

And so Cromwell alluded to the kind of control that we have now over the way companies can come onto the market and remain quoted on the market. It's a recognition of the work that we already do.

It's really I think in looking at our OTCQX, OTCQB and current standards and the work that we do and reviewing issuer disclosure and making those determinations, and now giving you this regulatory boost where we actually take on an official role in the process that inspected in that.

And that I'd say, Chris, you never get everything that you want in a rule proposal. The SEC staff as regulators comes up with different perspective.

But the important part was, we had candid discussions with them. And we're still having candid discussions, because a lot of the actual work is going to take under exemptive relief, or what are WSPs look like going forward, which is essentially, they're wrapping, -- they’re updating the regulatory framework to fit into and provide adequate regulation and transparency to where the market is moved to.

And what, our OTC Link ATS has become as a qualified interview or quotation system. And there are many places for by giving us expanded roles and responsibilities to -- for us to now improve the market further, make the market more effective for smaller companies.

Use automation to improve information for broker dealers and investors. So it says, we see it as it wasn't that we woke up and said, wow, this was fantastic.

But we got to a negotiated agreement, where that is workable. And more importantly, is our engagement with regulators today is that they really want to get this right, is both -- and that's going to be something that we're going to need to have that engagement every day, forever, because whatever things we've solved for yesterday's problems, there's going to be new ones that we're working with regulators and companies and broker dealers to create a market that works for all players.

Make sense. Thanks for that.

Just in terms of obviously minimal impact COVID on the business, was there any pickup in temporary relief for payments from maybe from Q2?

Hi, Chris. Thanks for the question.

Yeah, we know that in Q2 that we had been extended, extending temporary release in the form of extended payments QB markets renewing on the market. As I noted in our remarks, those companies renew on a monthly basis, we continue to do that during Q3.

As at the end of Q3, we have a couple of clients who are still on those extended payment terms. But overall, we've seen a really nice uptick, as I noted in the renewal rates Q3 over Q2, and some for that matter, Q3 over Q3 in 2019.

So, as it stands right now, our renewal rate this year over last year, is actually ticked up has improved a little bit, just one percentage point. So, we felt it appropriate in recognition of the very difficult market conditions to extend the release.

Our issue is I think we're, we're grateful for that. And we work through folks who needed that extra time and ultimately kept many of those clients -- most of those clients on the market.

So yes, overall, we did continue to extend release and it's proved to be a successful and appropriate strategy.

And just last question, I'll jump in queue. This is a huge pickup in the Form 211 filing, can you just talk about how that impacts your business.

And how do you view that number, pretty big step up, obviously, year-over-year?

So, I mean, I think there have been some slowdowns around COVID. But more importantly, there's a real change coming, which under the new 211, we're able to onboard it, and broker dealers can move to a financial advisor role.

And I think we're going to do a much better job of the onboarding process to under rule 50 -- the new Rule 15c-211 to -- there's information is publicly available for investors when a security initiates being quoted. And so we think those previous numbers, it's a good sign in the short-term, but more importantly is it's a change.

And if you look at the role their broker dealer played for Spotify's direct listing, Goldman Sachs and Morgan Stanley -- I think was Morgan Stanley was the second, but definitely Goldman Sachs for the financial advisors. And that's a better alignment than being the sponsoring market maker for a company that wants to go be publicly traded.

Thanks for taking my questions. I'll come back in queue.

Good luck in Q4. Thank you.

Great. Thank you.

Yes, first, I want to thank you for doing a tremendous job for the shareholders and myself, it's very much appreciated. One of the things that I know is going to be a very difficult job is to enact a market maker system -- excuse me, an issuer system for sophisticated investors.

And I feel in doing so, OTC markets should solicit information from all the people affected, especially the public investors who are sophisticated and may be able to fend for themselves. So, that would be my question is -- are we going to seek information from individual investors who are affected by the role changes?

And we'd like to market for sophisticated investors? That is my question.

Thank you, Barry. And that's a question I think, with respect to one of the exemptions that we're working towards, which would be that expert market, where sophisticated investors would continue to be able to interact with securities that may no longer be eligible for public quoting under the rule.

And so Cromwell talks a lot about our communication with the SEC and staff and how positive that has been. We're continuing to work in that vein to ensure that we can get this kind of relief for the market.

And then very absolutely, right, I think the next step or one of the next steps, as we roll it out, assuming this comes to fruition is going to be a lot of communication with the broker, dealer, subscriber and the companies that are impacted, and obviously the investors that are ultimately impacted as well. And so we will be putting out information in a more public in broader sense, as exemptions come through and as we develop our system behind that, and we'll also be soliciting feedback from those that are going to be impacted.

So I think to the question, I think it's a good point, and definitely something you should expect to see from us going forward.

Thank you.

I'll try to mention a second thought, OTC markets does extremely well for investors and we are not a reporting company to the SEC. So we in fact, take advantage of an exemption, either because of the number of shareholders we have or for some reason and we do a fantastic job outside the realm, our almost many other public companies do it.

So I want to thank people for not making us a reporting company and wasting all the money on that stuff.

Thank you. You're very careful with shareholders money.

So thank you is, yeah for that recognition.

Thank you

Hi. Thank you.

Thank you very much. Just a few more questions from me.

Something on the non-professional market data user area, I think you signaled that it’s a more volatile area. But I was wondering if there's any hope that some of these new customers may prove more sticky on this occasion?

Or should we realistically expect that to potentially mobilized lower? And then second question is on the pick-up in corporate services setting a new client sales, on OTC QB of your strong improvement in number of new clients in the quarter.

But I think the sequentially, the number of downgrades and other cancellations was also quite a lot higher. I'm just wondering if there any particular factors there.

And then just broadly on for both markets in terms of new sales? I think you've sort of hinted at this, but can I just check that the trends in Q3 positive trends, have it continued into Q4?

And then the final one, just following up on your recent comments on Rule 15c2-11 which sounds encouraging. You did highlight in the report there is another regulatory matters may require additional costs.

And also it’s early to give any indication, I'm just wondering if we think in terms of the number of additional staff you might require over the next sort of 12 months? Are we thinking in terms of low single digits as the potential requirement there?

Thank you for the questions, Andrew. I'll take the first couple, and then I'll hand off to Dan and Cromwell.

In terms of non-pro users, look, I think what we're seeing and what we're benefiting from as are others is a longer term trend, that season increasing the amount of retail investor participation in equities markets more generally, including our own. What's driving that?

I think certainly the volatility that exists right now. Certainly drives more activity into the market, more sort of active trading posture from non-pro users.

I think the longer term trends that is outside of that volatility is just in general some of the secular trends that have pushed more investors into the market, retail investors around the rise of so called Robo investing platforms, the availability of fractional trading, the move to a low or even zero cost trading commissions, all of those are longer term trends that are -- that have helped push over and above the volatility that we see today, help push more retail investors into the market. So again, it's hard to call and to see where that those two deal factors are pushing.

But as market conditions normalize it, yes, I think we would expect something of a pullback, but I wouldn't expect, a pullback to pre pandemic levels, necessarily, you ask this is their hope that these are sticky. There's always hope.

I think that those investors probably are a little more sticky, just given the overall trends in the market. It's just hard to call where that level, but we'll settle with, more normalized market conditions.

But as you know, overall, I you know, as I say, I think we'll see a little bit of a pullback, but not necessarily to pre-pandemic levels. Your second question, I think, was related to QB, so look, as we said in the remarks, we saw a nice pickup in Q2, actually outperforming Q2 versus Q2 2019.

That trend continued and actually accelerated into Q3. That, as you noted, I think with your question, we've continued to see just a small incremental contraction in the ending number of companies on QB.

And that's a trend that sort of started, with the beginning, count, if you like on for 2020. We did see sales sort of lagging a little bit in 2019.

In part that was as a result of us raising market standards and reducing the pool of qualified companies, something which, we're fine doing, because we think overall, it improves the market experience, raises the quality of the investable companies on that market overall. And then, as I noted, the first sort of four to five months of this year, certainly, we saw a pretty precipitous decline in sales.

So that rebound is just making up a lot of lost ground at this point. In September, if you take September on a standalone basis, we net added to the market for QB for the first time in, frankly, a few months.

And in October that has continued. That's not to say that, that trend will continue out through, the coming months.

But there are certainly encouraging signs in terms of the pipeline and the number of close sales, what we've got one of the strongest pipelines in terms of QB applicants that I've seen in my time here. So what we see encouraging trends, both in terms of sales, in terms of issuer engagement, we're seeing a very active resource sector, as we've noted in the past.

And, we've seen an uptick, actually in the renewal rates, which is, given the climate is really very gratifying. So, overall, we see positive -- we see positive signs, in our ability to continue to grow the number of issuers on that market, which I think somewhat segues into your third question, which is, have we continued to see that into Q4, in terms of the sales and for both QB and QX?

And the short answer to that is yes. Yes, we haven't.

And again, we're encouraged by that. That's not to say that, there's not considerable uncertainty, more generally, around how the next several months could unfold and beyond.

But for now, our sales team is working hard. We're engaging with a broad spectrum of issuers.

We're seeing, as I noted, a very active retail sector, both in Canada and in Australia. We're very much engaged with international opportunities and seeing strong growth there.

So overall, we're relatively positive. I think that, those were your three questions, I'll turn it over to Dan and Cromwell answers that.

Yes. And Andrew, this is Cromwell I'll -- from a high level, the changes to 211 are definitely something that if we see value, we're going to want to invest in the business, whether it's people or technology.

But from a, big picture, we're discussions with the SEC staff right now, are really about exemptions and automations. Where can we use technology?

And we're taking an approach which is, we've learned a lot in creating our Blue Sky data product, which is a lot, which is highly automated and it is in creation. And, as we repurpose that technology, but we have to make sure that the SEC is comfortable with that.

And, an acquisition that we haven't talked about much because we have not been successful on new sales has been [indiscernible] is its data set is going to be very helpful for automating ongoing bank compliance. And those are the places, if we're going to make the public less painful and more popular we have to use technology and automation to pull in information.

And put it out into the market, that's adjustable by broker dealers, investors and regulators. So, we don't have an answer, where that is, but we think that since the rules built a lot around our processes, there will be headcount ads, but we're in our budget process right now.

And even that's a bit unclear as we, because we've got discussions with regulators that are going to take, the next few months.

Okay. Thank you very much.

Thank you, operator, I want to thank all of you for joining us today. As always, we remain committed to supporting our clients in this challenging environment.

On behalf of our team, we would like to wish you and your families continued health and safety, as we look forward to connecting with you, next quarter.