Despite the potential pitfalls, America’s OTC markets are likely to get a boost from the Jumpstart Our Business Startups Act of 2012, which lets firms raise as much as $1 million via crowdfunding within a 12-month period, something that wasn’t previously allowed. Elio Motors Inc., a three-wheel-car company, became the first to take advantage of the new rules when it listed on an OTC venue last year.

Weak Returns

On OTC Markets Group’s website, investors are “strongly advised” to use caution when trading on its Pink market. Its other two venues, OTCQX and OTCQB, have stricter requirements. U.S. small cap markets run by Nasdaq Inc. and Intercontinental Exchange Inc.’s NYSE Group are even more stringent in their standards for listing.

“Our goal is to drive transparency,” Cromwell Coulson, the chief executive officer and president of OTC Markets, said in an interview. He added that the number of companies adhering to higher financial disclosure standards at his venues has increased; 99 percent of trading in OTC Markets-quoted securities comes from companies with current financial disclosure, Coulson said.

In Hong Kong, returns from the S&P/HKEX GEM Index have trailed the city’s benchmark Hang Seng Index by more than 290 percentage points since 2000. The bourse operator’s revamp plans include higher minimum market-value requirements and tighter rules on when controlling shareholders can sell their stakes. HKEX also wants to create a third venue that would only allow individual investors to buy shares of so-called new economy companies that meet higher regulatory standards.

Finding Gems

Of course, not all investors come to these markets looking for long-term investments. For many, the trading opportunities created by volatility in smaller stocks are the big draw.

On London’s AIM, 39 firms gained more than 1,000 percent in the two decades through mid-2015, according to data compiled by Marsh and his colleague Elroy Dimson. Marsh added that AIM’s market-wide performance could be turning a corner, pointing to the benchmark index’s gain of more than 30 percent over the past 18 months.

“We have to sift through the rubble of these companies, many of which we wouldn’t touch, but there are a few gems we hope to uncover,” said Salim Hart, who co-manages the $38 billion Fidelity Low-Priced Stock Fund.

Still, most companies on small-cap platforms never make it to larger exchanges. The graduation rate from AIM to London’s main market is about 6 percent, according to Marsh and Dimson, though tax considerations play a role. Fewer than 1 percent of securities quoted on an OTC Markets venue moved to a national U.S. stock exchange in 2015 while in Hong Kong, the rate of GEM transfers dropped to 2.7 percent last year from 7.2 percent in the second half of 2008.