On Thursday, OTC Markets Gr (OTC:OTCM) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
OTC Markets Group reported a record second quarter of 2026 with a 14% increase in gross and net revenues, driven by strong growth across all business lines.
OTC Link revenue surged by 27% with a notable increase in trading activity and subscriber growth, while Market Data and Corporate Services also experienced significant growth.
The company is focusing on expanding digital asset capabilities through a strategic alliance with BitGo and is preparing for regulatory developments to support tokenized securities trading.
Operating expenses increased by 9%, primarily due to higher professional and consulting fees, while operating income rose by 19%. The company declared a quarterly dividend of $0.30 per share.
Management highlighted ongoing strategic initiatives, including international expansion with a new Hong Kong office and advocacy for regulatory reforms to enhance market competitiveness and capital raising efficiency.
Full Transcript
OPERATOR
Good day and welcome to the OTC Markets Group Second Quarter 2026 Earnings Conference Call and webcast. At this time all participants are in listen-only mode. After the speaker's presentation there will be a question-and-answer session. To ask a question you will need to press star-1-1 on your touchtone telephone. Please note this call is being recorded. I would like to turn the call over to Dan Zinn, General Counsel and Chief of Staff. Please go ahead.
Daniel Zinn, General Counsel and Chief of Staff
Thank you, operator. Good morning and welcome to the OTC Markets Group second quarter 2026 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.
Information concerning risks and uncertainties that may impact our actual results is contained in the Risk Factors section of our 2025 annual report, 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.
Cromwell Coulson, President & CEO
Thank you, Dan. Good morning, everyone, and thank you for joining us. I will begin by reviewing our second quarter 2026 results at a high level and then turn to a discussion of our performance and priorities for the year. For the second quarter, gross revenues and net revenues grew 14%. This was another record quarter for OTC Markets Group with each business line showing growth that contributed to our overall strong results. OTC Link revenue was up 27% in the second quarter and 29% for the first six months.
Market data saw 7% growth in the quarter and is up 4% in the first half, and corporate services achieved 14% growth during the quarter and 17% over the first six months. OTC Link's performance continues to result from robust activity across our markets, with over 230 billion in market-wide dollar volume during the quarter and over 460 billion for the first half of the year. Increased trading volume is not the only measure of success for OTC Link.
Our team added several unique broker-dealer subscribers across our ATSs, giving us nearly 145 unique subscribers as of June 30. Our market data results were driven by growth in professional and non-professional subscribers during the quarter, combined with targeted price increases for certain products. Our ongoing success will depend on our ability to keep expanding our content and distribution network, increasing the client value of our products, and growing the number of subscribers.
Results in our corporate services business reflect the higher use counts at the start of 2026 driven by our strong finish to last year. This growth was largely due to the continued impact of the OTC ID Basic Market, which launched on July 1st of last year. Notably, we saw subscriber growth on both the OTCQX Best and OTCQB Venture markets as well as growth in the overall number of corporate clients using our services. Success in the corporate services business will come from strong solution-based sales to connect more companies coupled with our ability to drive client success and retention.
We prioritize helping actively engage companies improve the quality of their public trading to close the investor and broker information experience gap with exchange-listed securities. With respect to operating expenses, we saw a 9% increase in the second quarter. Our investment in our people remains our largest, most important expenditure. I remain extremely appreciative of the hard work and client-centered approach our OTC Markets Group team brings every day and their individual contribution to supporting our clients, improving our products, and growing the business.
We continue to work to round out our senior management team with a new head of Corporate Services. We are conducting a thorough search and review process to find a leader who can build our team, expand our offerings, and engage more companies to improve market quality. We will report on our progress in future earnings calls. Our decision last year to prioritize building out our overnight trading capability and launching the OTC ID Basic Market form the foundation on which we have achieved growth through the first half of 2026.
Overnight trading on our Moon ATS has been a useful learning experience to expand our capabilities. Working to launch it last year helped us engage and build our broker-dealer community and move together to offer robust around-the-clock trading for a wide range of investors. We continue to focus on the importance of engaging subscribers with our OTC Overnight market. The offering is ahead of actual demand. Providing investors convenient access to OTC securities on a continuous basis remains a key part of our vision for the future.
The OTC ID market has been a growth engine within corporate services, engaging and attracting a number of new corporate clients. We had over 1,100 companies trading on OTC ID at the end of the second quarter. Not only has OTC ID itself seen subscriber growth, we have also seen our efforts to educate the issuer community around OTC ID lead to increased sales and retention on our OTCQX and OTCQB markets. One of our key metrics is the percentage of connected companies and related dollar volume on our markets.
The connected companies trading on OTCQX, OTCQB, and OTC ID contributed roughly 26% of the dollar volume traded on our markets during the first half of 2026. Recent mega-cap additions on OTCQX, such as Siemens Energy AG, give a positive indication of our ability to serve blue-chip issuers on our markets going forward. Turning to our 2026 initiatives, we've made significant strides in preparing our platform for the introduction of tokenized and digital asset securities into our markets.
Our recently announced strategic alliance with BitGo will allow us to bring digital asset trading and custody infrastructure to broker-dealers utilizing OTC Link ATS. Enterprise-grade custody and clearing are a critical component of regulated securities markets. Currently, DTC performs that role for the industry. DTC's efforts are focused on tokenizing member firm entitlements rather than onboarding blockchain-native securities and other digital assets.
By connecting OTC Link's Qualified Inter-Dealer Quotation system with BitGo as a qualified digital asset custodian, we are assembling the core components to bring legal and lawful trading of blockchain-native securities into regulated securities markets. As regulations, rules, and guidance in this area develop further, we stand ready to support our FINRA member broker-dealers, market data customers, and other market participants as they innovate around these new technologies.
You can look at our value add in two parts. First, wholesale trading on our ATSs and price transparency through our market data distribution, which supports broker-dealers in sourcing liquidity and delivering best execution for their customers—the investors we serve—broker-dealers trading in a wide range of securities based on investor demand. Second, our premium markets provide engaged public companies with the platform to improve their investor experience, market quality, and breadth of accounts that can access their shares by distributing disclosure and demonstrating compliance with securities laws.
These fundamentals are foundational to traditional securities and digital securities. They are applicable to shares held at DTC, ordinary shares custody overseas, and now shares on the blockchain. We have also begun to see the first contributions from the opening of our Hong Kong office earlier this year, another of our 2026 initiatives. While that office is still in its initial phase, this international expansion helps further our mission to educate non-U.S. companies about how best to use our market structure, data, and disclosure tools, and to connect with more investors and build their brands in the U.S. Another high-profile initiative this year has been moving forward our regulatory agenda. We have invested our energy advocating for small company capital raising, recognition of our OTCQX and OTCQB markets, and achieving greater regulatory parity between comparable qualifying companies on our markets and those on NMS exchanges.
The SEC's recent set of rule proposals, specifically their proposal on registered offering reform, marks a significant step forward on all fronts. The SEC's proposal for the first time formally recognizes OTCQX and OTCQB as qualifying public trading markets on which issuers can conduct at-the-market offerings. This recognition reflects a long period of candid conversations with the SEC staff about how to increase the benefits of being a public company and reduce the burdens.
We are excited at the prospects it represents to increase tangible benefits for public reporting companies and make capital raising less burdensome. The proposed rules also cover the potential federal preemption of certain state blue sky laws, expanding access to more investors and reducing cost and complexity for registered offerings. As the SEC moves to finalize these and other related proposals, we will discuss the potential benefits to OTCQX and OTCQB issuers, as well as their advisors, in future earnings calls and reports.
At the beginning of this year, we announced a strategic determination to increase our quarterly dividend to better balance the ratio between quarterly and special dividends. We have also been opportunistically buying back shares in the public market. I'm pleased to announce that on August 4th our board of directors declared a quarterly dividend of $0.30 per share, payable in September. This dividend reflects our ongoing commitment to providing superior shareholder returns.
With that, I will turn the call over to Antonia.
Antonia Georgieva, Chief Financial Officer
Thank you, Cromwell, and good morning to everyone joining us today. We appreciate your continued interest in OTC Markets Gr. I would like to start by recognizing our exceptional team. Their focus and execution in the second quarter delivered meaningful momentum, thus positioning us well as we head into the second half of 2026. Let's turn to our results for the second quarter ended June 30, 2026. Starting on Page 7 with all comparisons to the same period of 2025, we generated gross revenues of $34.8 million, up 14% year over year, while revenues less transaction-based expenses grew 12% to $30.6 million.
Our OTC Link business delivered another quarter of strong growth with revenue increasing 27%. Edge trading activity across our ATSs remained robust with Moon ATS continuing to ramp up. Transaction-based revenue generated by OTC Link ECN, OTC Link NQB and Moon ATS increased 47%, while transaction-based expenses paid to liquidity providers increased 39%. Usage-based revenues from OTC Link ATS increased 6%, largely driven by a higher volume of trade messages during the quarter.
Average daily transactions on OTC Link ECN and OTC Link NQB reached approximately 95,000, a 50% increase year over year, while Moon ATS saw approximately 69,000 average trades and 7.8 million average shares traded per session. While trading volumes have been strong year to date, they remain inherently unpredictable and could decline in the future. In terms of broker-dealer subscriber numbers, we ended the quarter with 144 unique subscribers across our ATSs, up from 137 a year ago.
The subscriber engagement with our multi-ATS model reflects the value our open platform offers in support of the diverse business, operational and compliance requirements of our broker-dealer subscribers. Our Market Data Licensing revenues increased 7%, comprised of an 8% increase in redistributor-based revenue, a 10% increase in revenue from direct-sold licenses and a 1% increase in revenue from Data and Compliance Solutions. Redistributor-based revenues increased across both the professional user segment, which grew 6%, and the non-professional user segment, which increased 47%.
In each case, the revenue increases were the result of growth in user counts, with professional users increasing 5% and non-professional users increasing 38%. The number of non-professional users continues to fluctuate period to period with market activity and varying retail participation in the market and may continue to fluctuate in the future. Revenues from direct-sold licenses increased primarily due to price increases for certain licenses and growth in subscribers.
Data and Compliance Solutions revenues benefited from growth in Data services and our Blue Sky data product, partially offset by lower revenue from EDGAR Online. Our Corporate Services business delivered 14% revenue growth in the second quarter with contribution from all of our markets. OTCQX revenues increased 9% while OTCQB revenues grew 10%, supported by both higher average company counts and pricing adjustments effective January 1, 2026. In terms of new sales, we added 33 OTCQX companies and 63 OTCQB companies in the second quarter compared to 39 and 85, respectively, in the prior year.
Quarter-end OTCQX companies reached 585, up 5%, while quarter-end OTCQB counts were 1,101, up 3%. Revenues from our OTC ID market and from Pink Limited subscribers to the Disclosure and News service increased 32%, reflecting the continued impact of the OTC ID Basic market launch in July 2025. At quarter end we had 1,037 OTC ID companies compared to 1,035 at launch. Combined with the Pink Limited subscribers to DNS and other products, these companies reached a total of 1,477, up 8% from 1,362 a year ago.
Month-to-month variability in our Corporate Services subscribers is driven by new sales offset by non-renewals, corporate events and compliance downgrades. Turning to Page 8, operating expenses increased 9% year over year. The primary drivers were professional and consulting fees, which increased 54%, and IT infrastructure and information services costs, which grew 11%. Professional and consulting fees reflect increased regulatory and clearing fees related to the higher trading activity as well as certain accruals for regulatory matters.
Compensation and benefits comprised 58% of our total operating expenses in the second quarter compared to 63% in the prior-year period. Moving to Page 9, operating income increased 19% to $10.5 million and operating margin expanded to 31.1%, up from 29.9% in the prior-year period. Net income was $8.6 million, up 17%, and diluted GAAP earnings per share reached $0.71, up 8.18%. In addition to certain GAAP and other measures, management utilizes adjusted EBITDA, a non-GAAP measure which excludes non-cash stock-based compensation expenses.
Our adjusted EBITDA was $12.7 million in the second quarter, up 14%, and our adjusted diluted earnings per share were $1.04, up 13%. Operating cash flow in the second quarter was $11.5 million and free cash flow was $11.4 million, compared with $11.2 million for both measures in the prior-year quarter. During the second quarter we returned a total of $6.6 million to shareholders, including $3.6 million in dividends and $3 million in open market share repurchases.
Compared to the prior-year period, this represented a threefold increase. Turning to Page 10, for the six months we generated $11.2 million in cash from operations and $10.7 million in free cash flow and returned $13.4 million to shareholders, compared to $10.4 million in operating cash flow, $10.2 million in free cash flow and $7.3 million in cash returned to shareholders, respectively, in the same prior-year period. Overall, the second quarter reflected continued momentum from the start of 2026, with robust revenue growth in each business line, expanding margins and continued progress on our strategic initiatives.
We remain focused on disciplined execution, investing selectively to support growth, and returning capital to shareholders while maintaining financial flexibility. With that, I'll turn the call back to the operator to open the line for questions.
OPERATOR
Thank you. As a reminder, to ask a question, please press star-1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star-1-1 again. Our first question comes from Steve Silver with Argus Research Corporation. Your line is open.
Steve Silver, Analyst at Argus Research Corporation
Thanks, operator, and congratulations on the quarter. In the prepared remarks, you mentioned that the Hong Kong office is still in its early days, but I was curious as to whether you're seeing any trends in the OTCQX and OTCQB pipeline now that the company has come out of a period of contraction and it's returned to net additions for both QX and QB.
Cromwell Coulson, President & CEO
Hey Steve, thanks. That office really is in such an early stage that it's probably premature to talk about trends at this point. We're seeing a nice contribution and seeing that team, there's a couple of people in that office, settle in nicely. So not quite ready to say this is a trend that we've either noticed or could expect to see going forward, but encouraging signs nonetheless.
Antonia Georgieva, Chief Financial Officer
And Steve, in addition to the Hong Kong office, we have had continued and continuous coverage of the Asia Pacific region through our New York-based sales force as well. So while we do expect net positive contribution from the Hong Kong office, there's really no significant material change in our coverage of the region and how we have been doing globally and in that particular region over time.
Steve Silver, Analyst at Argus Research Corporation
Okay, great. And one more if I may. You mentioned the Market Data Licensing growth despite the decline in EDGAR revenue. I'm just curious as to whether you're seeing any signs of stabilization in the rate of EDGAR cancellations. I believe the disclosure document mentioned 6% declines in revenue. So just curious. I know it's been a long-term process to integrate EDGAR into the Market Data Licensing offering. Just curious if there are any emerging signs of stabilization there.
Thanks so much and best of luck in the second half.
Cromwell Coulson, President & CEO
Thanks, Steve.
OPERATOR
Thank you. Our next question comes from Brendan McCarthy with Sidoti and Company. Your line is open.
Brendan McCarthy, Analyst at Sidoti & Company
Great. Good morning everyone, and thanks for taking my questions here. I wanted to start off on the digital asset side and the potential alliance with BitGo. I recall that OTC Link received the regulatory approval from FINRA to trade digital assets, I think it was a couple of years ago, but curious as to what you see as the key regulatory hurdles at this point for that initiative?
Cromwell Coulson, President & CEO
Thank you for that question. I would say regulatory clarity. And Congress is debating a set of rules, the Clarity Act, which may or may not pass. And there's some very good stuff in the Clarity Act. However, there's also some places where the world of the crypto community wants a pass on fundamental and foundational parts of securities regulation. The part of how do we bring into regulated broker-dealers tokenized securities is really the question.
When we got our license from FINRA to trade digital asset securities on our ATS, there was no way for FINRA member firm broker-dealers—but it was really because of the SEC—to custody and hold tokenized securities. The SEC is in a very different place and we're expecting that the SEC is going to be rapidly moving forward on providing clear rules of the road. But we want to make sure that broker-dealers have enterprise-grade, competitive choices for the critical component of custody.
So that's where it is. The SEC has been rumored for a while, but we believe it's getting closer, to have an innovation release which is going to expand the amount of native tokenized securities that will be available. We don't know what that is going to look like, and I hear a lot of different sources—you know, some based on overexcitement, some based on paranoia. But we have an expectation that this SEC is going to be quite rational and thoughtful, and this technology will move forward and, where it is useful, will find uses in financial markets.
Brendan McCarthy, Analyst at Sidoti & Company
Understood. I appreciate that detail, Cromwell. And just to clarify, it sounds like the SEC is trying to move forward with the initiative, but is it contingent on the Clarity Act passing here?
Cromwell Coulson, President & CEO
I don't believe the SEC really believes they need any tools for the assets that are securities. A big bulk of the Clarity Act is related to the CFTC and spot crypto markets. However, securities markets are the SEC. If something is a security, the SEC has, I would believe, everything they need and can start moving forward.
Brendan McCarthy, Analyst at Sidoti & Company
Great, great, that's helpful. Thank you.
OPERATOR
Next question.
Brendan McCarthy, Analyst at Sidoti & Company
I'm curious about the new Nasdaq enforcement standards around the $5 million market value threshold. It appears tough to quantify at this point, but it seems like it would obviously be a favorable read-through for OTC Markets. Do you have any comment on that change at the Nasdaq level?
Cromwell Coulson, President & CEO
Well, we have a fantastic comment letter on the Nasdaq rule proposal which I would Recommend every shareholder of OTC Markets Gr and Nasdaq and any investor in smaller public companies whether they are NMS securities or OTC securities. Reed, the Nasdaq has a bulk of companies which has frustrated the industry of broker-dealers. SIFMA, you've seen comment letters from Schwab, you've seen comment letters from Citadel, you've seen comment letters from Robinhood, you've seen comment letters from Virtu, and these are securities which are speculative and financially not sound.
However, they use their Nasdaq listing to make themselves look more blue chip. The exchanges have a model because it's very brand driven. Anything in the blue Tiffany box is of the highest quality. That model starts to fail if the securities are not, because investors are not fully informed. Our markets, we've always taken a very different approach because we have a range of securities. We've taken an approach which the auction houses have used. And a leading auction house can sell a Rothko and it can also handle a sideboard from grandma's house.
And they have that range of objects that trade at efficient prices by focusing on fundamentals. Is the object as described? For that we use disclosure and updating material information. Number two, are known flaws disclosed? We call those risk disclosure in securities markets. Number three, what's the provenance? Ownership history? We call that governance. We call that share issuance. We call that insider activity in securities markets. And finally, is it legal and lawful to trade within this jurisdiction?
Are there restrictions on ownership? And so it's a more nuanced approach. But our market model works better. We have Fannie Mae, it trades fine, but it does have known flaws. And it's not a blue chip. But we can also handle international blue chips. And when companies are engaged, when they're putting the information onto investor screens and into broker machines and they're maximizing their compliance, they will be able to have the widest possible market with the greatest potential valuation.
So that's how I see it is. And it's a difference. So that rule proposal is out there. There are people who make money doing discounted toxic financings who want to be able to peddle their wares on an exchange. My belief is that the SEC's registered offering reform and bringing ATMs in is really going to make the market more efficient and make the OTC market a more competitive capital raising market in a way that's good for companies and is good for investors.
Sorry, that was a bit long-winded.
OPERATOR
Thank you. Our next question comes from Walter Hopkins with 18 Square. Your line is open.
Walter Hopkins, Analyst at 18 Square
Hi Cromwell and the team. This touches on what you were just talking about a little bit, but just kind of focusing more on those recent beneficial regulatory developments: the ATMs, federal blue sky preemption for registered offerings and plus perhaps the 2028 ESOP parity provision. Can you comment on the degree to which these would stuff more value into the tiered corporate service offerings? Do you see any of these as potential big needle movers?
In practice I could see the potential ATM expansion standing out as a big value proposition to OTC-listed companies that are on OTCQX or QB because it would provide a lot of financing optionality for a relatively small price. But I'm really interested to hear how you think about it from that business perspective and from regulatory perspective too, to the extent you want to add more comments there.
Cromwell Coulson, President & CEO
So the first part I'm incredibly excited for public companies that do the work to be SEC registered is they're going to get a lot more value. They're going to be able to sell shares almost as easily as they buy back shares in the market through regular brokers' transactions at a much lower cost from the fees they pay Wall Street, which is, I'm going to say is brokers and investment banks, but also the intermediation discount, which is the private placement market, which companies that are newly public have smaller market caps and fewer shareholders and are traded in the top tiers of the top markets of the OTC market.
That I'm really excited about how the world will change because the status quo has been if you need to raise capital as a smaller public company, most of these companies became NMS securities because it was easier. There are fewer restrictions and investors saw the brand as meaning you are closer to a blue chip than a speculative entrepreneurial entity. And there's nothing wrong with being speculative. It's just when investors don't understand that and they can't price the security properly.
So that's a huge change. How it'll, you know, how it'll change the dynamic is, I don't know. Many of these companies that are on Nasdaq today, when they are finally delisted, they die pretty quickly because there wasn't anything there. This is comparison to financially strong. When a company leaves Nasdaq that's a community bank, there's no change in their market. They've just saved a bunch of costs and they're still serving their shareholders. Having this competitive offering is really exciting.
I can't tell how it's going to happen. And then the final piece, and I think Dan's been on two panels at the SEC, is that the SEC specifically has recognized OTCQX and OTCQB in the rule proposal. And when we built OTCQX it was a private market initiative. Many people said, oh, until the regulators opine on it or tell people to join it, you're going to, you know, why should we care. But regulatory recognitions come from past performance and being a private market reference.
And so the regulatory recognition is important. And we're also going to work to make sure that our rule sets and how we run that market respond over time with the responsibilities of greater regulatory recognition. Is that again, too long-winded? But I think these are very big changes to our markets that are coming along perfect.
Walter Hopkins, Analyst at 18 Square
Thank you. And we've already hit on this a lot, so I'm not sure if I'm going to ask this perfectly the right way, but I'm curious to see how you see the regulatory landscape regarding the Nasdaq delisting. It seems that maybe it's got some teeth this time. I could be kind of misinterpreting what's happened in the past, but it seemed like in the past Nasdaq had rules that they didn't necessarily follow as closely as folks had hoped. Do you think that this time, with the minimum market value requirement and the accelerated compliance window, that it's got more teeth?
Cromwell Coulson, President & CEO
Well, my hope is that Nasdaq, with the change at the SEC, Nasdaq becomes more attractive to public companies and we become more attractive to public companies and the pies grow. So I do believe they've been holding on to keep some metrics where they're looking at number of companies rather than quality of companies. We have a model because it's very different than their blue box branding. Our model of security by security and based on core functionality offers a better market for many companies on their journey of becoming a bigger, more successful company, building their products and creating value for shareholders.
Daniel Zinn, General Counsel and Chief of Staff
Walter, on a purely regulatory front, seeing the rule proposal or the rule get approved and then stayed for a little while, there's obviously some regulatory mechanisms at work there. But it does, from kind of the core of your question, it does seem like this rule is likely to be enforced as soon as the stay is over and the SEC completes its review and that Nasdaq is more aligned with seeing this happen than maybe they have been in the past. To Cromwell's point, it remains to be seen what happens with those companies by the time they get here and where they might fall on our market.
But it does seem like the industry support for this kind of movement and now the exchanges making these rule filings is moving things in that direction.
Cromwell Coulson, President & CEO
I mean, with toxic financings that are discounted and the ability of companies to do multiple reverse splits, if you stay on Nasdaq, you can fund a bad business forever. And that really removes market forces because usually if management is not executing in a manner that investors want to fund, besides for an arbitrage, is they cut back their spending and they refine their focus. Traditionally, before we saw this world of multiple reverse splits, we would see companies that would come to the OTC market have lowered expenses and focus on turning around the business, resetting.
And this is a classic part of markets. But when the pricing process gets broken and there's an ability to arbitrage capital at a discount where the loser is the public shareholder, the industry needs to fix that.
Walter Hopkins, Analyst at 18 Square
Thank you. Since the OTC ID has rolled out, has your view of its role shifted at all based on what you've seen so far and heard from market participants?
Cromwell Coulson, President & CEO
I would say one, it filled in a really important basic entry level. It also allows us to improve our standards for OTCQX and OTCQB because it's really a disclosure-based process and it expanded the conversation. I still think we're very early days in understanding of how our markets work among the issuer community and how we talk about them and the value and functionality. We have great companies of all sizes that use our three markets to better serve investors, expand the number of investor accounts and brokers that can access their securities and comply with U.S. securities laws. But building out that understanding is a process which I still believe we are early days of consensus recognition. And part of it has been that we haven't been a financing market and ATMs coming to our space is going to make it make that easier for securities that are traded. And federal preemption for SEC-registered offerings is going to put us in the mix.
Walter Hopkins, Analyst at 18 Square
Thank you. And then just the last question. On the share repurchase, we saw that you repurchased shares for what I think was the first time doing it in the open market. I'm just curious if you could share any more detail on that process. I think last time you stressed not wanting to impact trading too much. Was it relatively easy during the quarter to repurchase shares without impacting trading too much? Could you see yourself repurchasing more shares if, say, that the price was to drop a decent bit relative to your perception of the value of the company?
Antonia Georgieva, Chief Financial Officer
Yeah, Walter, we actually did this quite a few years ago. So you are certainly forgiven for not remembering some open-market repurchases. But yeah, to the point of your question, it's been a relatively smooth process, right? A seamless process. We put a program into place, we've been able to access shares. You can see in the quarterly report kind of the room we have left on our authorization to buy back. So we're not, I don't think it was over-indexed for the time that the program's been in place so far.
We have some room to go. The pricing has been, you know, relatively stable within that time frame. So all signs point to this being a kind of regular and smooth part of what our going-forward process will be for a while now. And obviously we'll report back if anything drastic changes.
Walter Hopkins, Analyst at 18 Square
Thank you.
OPERATOR
Thank you again. To ask a question, please press star 11. Our next question comes from Jonathan Isaac. Your line is open.
Jonathan Isaac, Analyst
Hi. Thanks for taking my questions. Congrats on the great quarter as always. Rest assured. There is a question at the end of this question.
Cromwell Coulson, President & CEO
We expect a question at the end of the question, Jonathan, and then hopefully some thoughtful emails as your viewpoint as an investor, it's always welcome to hear different perspectives, especially thoughtful ones.
Jonathan Isaac, Analyst
Well, it's yes, rest assured. Rest assured. I'm probably simplifying things, but when I think about your network effect, the proof I have is that from 2007 through 2025, the growth rate of your free cash flow per security quoted on your marketplace significantly outpaced the growth rate of the number of securities quoted on your marketplace. The monetization of units, far outpacing the growth rate of units is, I believe, the secret sauce to your economic posture in the long term.
Your success as a platform begins really with growing this network of securities and with being able to attract new incremental issuers to your value proposition. The 2007 through 2025 period was defined by a constant refrain. The public markets are shrinking. Companies are staying private longer or even permanently. You excelled in an environment which was not ideal. I'm excited to see how you perform if tokenization renders this narrative a historical artifact. My question is how is your growth opportunity in a world where tokenization really catches on different from the one which existed before tokenization?
Cromwell Coulson, President & CEO
Thank you, Jonathan. I think tokenization is an important part of innovation and attractiveness of public markets. I would also say that regulatory modernization is just as important. We've come through a cycle where public companies paid more and got less for being SEC reporting. We've come through a cycle when politicians have put burdens on public companies around the world while private equity and private markets has grown. I think tokenization opens up a lot more excitement of investors to own different types of assets, but that also needs a regulatory rule set that can work.
There's a lot of ideas around because most of the blockchain-based securities that are trading in the US are on extremely walled to slightly walled gardens and they're not really tradable. What we would call a free trading public share where it can be transferred from broker to broker in an efficient, low-cost manner. But that will change and we believe that the regulatory framework, in fits and starts, will move forward and hopefully there will be a large amount of securities and excitement that start coming into public markets.
And the foundational functionality we have, which is really, as I said in the call, it's a one-two punch. The first is the freemium model—it's not freemium because it's a great business providing a platform for broker-dealers to source liquidity and deliver best execution for investors in OTC securities. And there we work really hard to improve operational efficiency and reduce risk for our broker-dealer clients. Then the second part is companies have a choice, because if a company is not connected into the trading market of their securities, if a company is not demonstrating clearly and easily their compliance with U.S. securities laws, both federal and state, as well as FINRA—what standards they meet for what types of accounts and investors that can access them in a digital manner—they're going to have an imperfect market. And those tools matter if you're a tokenized security or if you're a traditional security. And the traditional securities markets through DTC is incredibly competitive and efficient. There are going to be new things that get created in how people do things.
But this part is an opportunity. However, it is also a highly competitive market because the crypto industry has their technology stack. They trade things differently than the securities industry and we want to be able to serve regulated entities and issuers of securities if that's the broad side. Now, getting down to the details to make all these things work and fit together, it's not going to be easy.
Jonathan Isaac, Analyst
As a follow up, the DTCC aspires to eventually tokenize all 1.4 million securities in their custody. And they have a three-year no-action letter to get this going and presumably to reach escape velocity. While you may have opportunities in that wave of tokenization, do you see your opportunities to reach new issuers as mostly being in the wilderness of companies not in the DTCC ecosystem?
Cromwell Coulson, President & CEO
So the DTC is a walled garden. It's a big garden because it basically reaches every broker-dealer either directly of DTC member firms or through other broker-dealers through their clearing firm. It is using tokenization for the technology's promises: smart contracts, atomic settlement, the ability to immediately move collateral. It has an opportunity to really improve the efficiency of the system by putting the framework of an internal database externally, or the pieces of it, that I think is going to be an important tool.
I also think the blockchain at the transfer agent level is going to be an important tool. The registered transfer agent. They have opportunities to create more value and transparency in the issuance of securities and the ownership by insiders. What happens in the wild—the success of the crypto community, the centralized platforms—has come from these tokens being created in DeFi and these tokens being created in overseas markets. And then as they become established they flow through into the US markets.
It would not be out of line to assume that that could expand to securities with clear rules of the road from regulators. Does that make sense, Jonathan?
Jonathan Isaac, Analyst
That's yes. Thank you. And my last follow up on this is do you need any more partnerships or capabilities for your tokenization go-to-market strategy to be complete?
Cromwell Coulson, President & CEO
Well, we've said that the different components your clients need competitive offerings. There are a few enterprise-grade players whose platforms are well proven in non-securities digital assets. And we really believe for our broker-dealers we want to be able to set up, but we don't want to make a choice—you have to lock into this vendor. But we think BitGo is an exciting first partner as a first mover. They're going to get a real opportunity as the SEC moves rather rapidly to expand the ability of blockchain-native tokenized securities to be tradable by regulated broker-dealers.
But this is early days.
Jonathan Isaac, Analyst
Great. Yes. My last question is about the expert markets. After the updates to Rule 15c2-11 effective in late 2021, your expert market became a penalty box for companies who cannot be quoted publicly and are accessible only by deemed experts. There seems to be an opportunity to create a more premium product within the boundaries of the expert market where sophisticated investors can engage with companies who choose and are not only forced to trade there.
We can see examples overseas and in market history of how a premium restricted venue might emerge. In the UK today there is the Pisces market. In Japan, there is the Tokyo Pro market. Years ago, Nasdaq's PORTAL attempted to be a home for Rule 144 securities. A conceptual model for expanding the expert market beyond simply being a penalty box may exist in any of these. Dan, you recently issued a comment letter to the SEC stating how the expert market in its current form is not optimal and how it might begin to be modernized.
Cromwell, you had a blog post nearly three years ago suggesting that an institutional space for more sophisticated trading might emerge within the expert market for Rule 144 securities, while also discussing how accredited investors might use the expert market to transact restricted securities. My question is, given the rationale of similar spaces overseas and in market history, and given your thoughts about market regulation and market structure, how do you think about the evolutionary capabilities of the expert market?
Cromwell Coulson, President & CEO
Thank you. That's a big question and almost as long-winded as most of my answers that everybody complains about internally that I need to become briefer. However, thank you for reading our comment letter. The legal team has been very thoughtful as we've tried to have candid conversations with the SEC. Back in the previous regime of the SEC really dropped the ball in the expert market and there was no guidance. We were very close to having a private market for professionals.
But with price transparency we've always believed there's a need not only for fallen angels and companies that have gone dark, because a market price protects outside investors, however a place for best execution and liquidity sourcing in private securities or securities with restrictions. And we're still in conversations. As you can see from the letter, we believe that you can have transparency without opening it up to plain vanilla investors. And we believe that 15c2-11 is a very good bargain overall—that for a company to have a public quote they need to make adequate current information publicly available.
But that doesn't mean we shouldn't have a private quote and that we shouldn't both have limit orders, which is in the UK—they've got markets which are really just investor limit orders—but also broker-dealer proprietary liquidity, because investors are not served. And the current way 15c2-11 works, many investors' orders are hidden because it's too much of a regulatory burden for broker-dealers to identify if the insider is an affiliate. So we're optimistic with this SEC across all areas that securities law can be modernized, streamlined, improved.
But they've got a lot on their plate and we're working hard on it and we will see. It's a lot of those points though. You can set something up and then you have to get engagement of the industry. So that's, you know, that's my answer. I see potential, but progress is much harder than potential.
OPERATOR
Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Cromwell Coulson, President and CEO, for closing remarks.
Cromwell Coulson, President & CEO
Thank you, operator. I want to thank each of you for joining us today. I would encourage you to read our full quarterly report for the second quarter of 2026 and the earnings press release. For more information, links to both are available on the Investor Relations page of our website. On behalf of the entire team at OTC Markets Group, we look forward to updating you on our key initiatives and that will continue to shape the integrity and competitiveness of the public markets.
OPERATOR
Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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