written by reader DIfferent Exchanges and Tickers

By xiexgp@gmail.com, November 2, 2013

Travis, what is difference between, for example, TSX-V:KLH and OTC:SBOTF? I think it’s to do with stock exchanges but which ones and does it make any difference on which exchange invest through? Thank you, Sue.

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Travis Johnson, Stock Gumshoe
November 2, 2013 8:22 am

Yes, in your example that’s the same stock traded through two different systems: the venture exchange in Canada (that’s TSX-V, the stock would often be abbreviated as KLH.V), which is the home listing for this stock and the place where it files any required reports with regulators (you’d find them in Canada’s SEDAR — sort of like the SEC’s EDGAR database); and the over the counter (OTC) trading system in the US, which isn’t a real stock exchange but is a standardized ticker that brokers can use in trading securities that are unlisted back and forth in computer networks (or in the old days, by phone).

Stocks that trade ONLY over the counter (could be the OTC Bulletin Board, or the pink sheets, the terminology varies) are generally either too small or too shady to get a listing on the exchange — but that’s not necessarily true of stocks that also have a stock exchange listing in another country, in that case the OTC or pink sheets ticker is used more as a convenience for brokers, who can buy the shares for you through a market maker on the home exchange and just record them using a US ticker like SBOTF to record your position in their books and in your account instead of having to let you trade directly in that other exchange (Canada’s venture exchange, which is the “small and emerging” arm of the Toronto Stock Exchange and has pretty light listing requirements).

There is almost always less volume on a US pink sheets or OTC ticker than there is in the home exchange, and the pricing is almost always off by at least a couple cents — so if you can trade in the home exchange directly (some brokers will let you), it’s always better to do so. The difference can be minor, but there’s almost always a difference and it could become a substantial difference if the stock drops rapidly and you’re trying to sell. The difference is not as substantial if you intend to hold a position and be a long-term investor, the company is the same and your ownership stake is the same, it’s just that there’s a less liquid system for getting in and out of the shares, and “less liquid” generally means you pay more to buy and have to accept less to sell, particularly if you’re in a hurry either way.

When trading OTC or pink sheets listings of foreign stocks, always do your due diligence using the quarterly or other regular filings in that home country as you research it, and always use the price of the stock on the home exchange (TSX-V, in this case) as the “fair” price and use limit orders based on that price. Never use market orders OTC or on the pink sheets.

Some brokers will charge extra fees for foreign stock trading, whether through a pink sheets ticker or directly on a foreign exchange, so check with your broker as well.

Good luck with whatever you decide — as far as the ticker you used as an example, I haven’t looked at the company (Stellar Biotech) much lately but I know there are a lot of active folks following it on the site here.

The original article I wrote on them is here: http://stockgumshoe.com/reviews/alternative-energy-speculator/minting-millions-from-the-magic-molecule-nick-hodge/

Followup discussions from readers here:
http://stockgumshoe.com/2013/09/microblog-aftermath-stellar-biotech-conference-presentation-much-ado-about-little/
http://stockgumshoe.com/2013/08/microblog-stellar-biotechnologies-the-real-deal-or-just-more-tulip-bulbs/

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sassykind
Member
sassykind
November 3, 2013 11:00 am

Thanks very much, Travis. Can I print copy of this or could you send it to Email? Sue.

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takeprofits
Irregular
November 3, 2013 12:34 pm

just as a follow-up to the excellent explanation of stock tickers by Travis, it never ceases to amaze me how much difficulty some subscribers seem to have in buying Canadian stocks.
As a long time investor I am not aware of ANY Canadian broker platform that does not allow us to purchase U.S. stocks on-line. Since we are neighbours with substantial two-way trade I can not understand WHY U.S. brokers would not reciprocate, certainly if I lived in the U.S. I would not consider dealing with a broker where I could not buy Canadian stocks on-line.
As one of the richest natural resource countries in the world and Canadian miners operating world wide besides the Toronto Exchange financing more miners than any other exchange in the world, access to that market at lowest cost is an investor essential.

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Lynn Clark, Stock Gumshoe
November 19, 2013 7:10 pm

Sue: To print it, click “Print Friendly Version” in green, just under your post, and above Travis’s response.

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