Core Viewpoint - The OTC market serves as a vital platform for small and medium-sized enterprises (SMEs) to access financing and transition to larger exchanges like NASDAQ and NYSE, acting as a "fast track" for companies aiming for higher market visibility and capital access [2]. PART.1: Current Status of OTC Markets - Since 2007, OTC Markets Group has restructured the OTC market into four tiers: OTCQX, OTCQB, OTC ID, and Pink Limited, enhancing the organization and transparency of the market [4]. PART.2: Financing Methods for Chinese Enterprises in the OTC Market - OTC market listings can facilitate financing, similar to China's New Third Board, although the extent of financing depends on the enterprise's value [10]. - Pre-listing equity financing is crucial for companies before they list on the OTC market, with underwriters playing a key role in developing effective equity plans [11]. - Companies listed in the OTC ID and Pink markets can raise funds through the issuance of new shares, leveraging their OTC status to attract domestic investors [12]. - Effective market capitalization management can enhance investor confidence and drive stock price appreciation, facilitating further fundraising opportunities [13]. PART.3: Trading Mechanisms in the OTC Market - The trading process in the OTC market is similar to that of U.S. stock exchanges, with prices reflecting market supply and demand [15]. - The OTC market operates on a dealer network system, where market makers provide liquidity by continuously buying and selling securities [16]. - Transactions are conducted through brokers, allowing for negotiation between parties to achieve optimal trading outcomes [17]. PART.4: Retail Shareholders and OTC Shell Companies - Domestic retail shareholders can register as shareholders of OTC shell companies, as there is no limit on the number of shareholders, allowing for free trading in the secondary market [18].

Core Mechanism - The OTC market operates without a central trading hall and relies on market maker quotes [10] - Market makers are essential to the OTC trading process, holding inventory and providing buy and sell quotes [10] Trading Process - Investors place buy or sell orders for OTC stocks through their brokerage accounts [2] - If the brokerage has a market-making department, it may attempt to internally match client buy and sell orders [2] - Orders are typically routed to market makers or accessed through the OTC Link ECN [2][7] - The transaction price is determined by the market maker's quoted price, not the investor's limit price unless the limit is better than the market maker's quote [4] Electronic Platform - OTC Link ATS is the core electronic trading platform operated by OTC Markets Group, connecting hundreds of market makers and brokerages [5] - Market makers update their quotes in real-time through OTC Link [6] Important Characteristics - OTC stocks tend to have higher price volatility due to lower liquidity and potentially insufficient company information [8] - Trading hours align with major exchanges, operating from 9:30 AM to 4:00 PM Eastern Time, with possible pre-market and after-hours trading [9] - The settlement cycle is consistent with the U.S. stock market standard of T+2 [9] Investor Steps - Investors must choose a brokerage capable of OTC trading and complete account registration [11] - Funds can be deposited into the trading account via bank cards or third-party payment methods [11]