Steel Partners Shifts to OTCQX: A Strategic Move or Cause for Concern?
3min read Steel Partners Holdings L.P. (OTCQX: SPLP, SPLPP) has made a bold move by voluntarily delisting from the New York Stock Exchange (NYSE) and transitioning to the OTCQX® Best Market, effective May 2, 2025. This decision, framed as a cost-saving and administrative simplification strategy, raises critical questions for investors: Is this shift a smart reallocation of resources, or does it signal underlying vulnerabilities? Let’s dissect the implications.
The Transition Details
Steel Partners’ delisting from the NYSE followed the filing of a Form 25 with the SEC on April 21, 2025, marking its final trading day on the exchange as May 1. By May 2, its common units (SPLP) and preferred units (SPLPP) began trading on OTCQX. The move was accompanied by a SEC deregistration on July 30, 2025, which relieved the company of its obligation to file periodic reports under the Securities Exchange Act of 1934—a significant reduction in regulatory compliance costs.
The Case for OTCQX
The company cited two primary motivations for the shift: cost efficiency and streamlined governance. Trading on OTCQX eliminates the recurring listing fees and reporting requirements of major exchanges, potentially saving millions annually. Additionally, OTCQX’s criteria—rigorous financial standards, robust corporate governance, and compliance with securities laws—suggest Steel Partners meets high benchmarks.
However, the transition’s benefits hinge on sustained investor confidence. OTCQX requires companies to provide real-time disclosures and filings via the OTC Markets platform, ensuring transparency.
Risks and Uncertainties
The move carries notable risks. First, liquidity could diminish if brokers reduce their support for SPLP/SPLPP. The SEC noted that deregistration might limit access to capital markets, and Steel Partners itself warned that trading volumes could drop. Second, the loss of NYSE’s visibility may reduce investor interest, especially among retail traders who prefer exchange-listed stocks.
Steel Partners also faces reputational risks. While OTCQX is a reputable platform, some investors associate OTC markets with smaller, less established companies—a perception that could pressure valuations.
Corporate Governance and Mission Alignment
Steel Partners emphasized its adherence to corporate governance standards, aligning with its stated values of Teamwork, Respect, Integrity, and Commitment. The company’s “Kids First” initiative, focusing on youth sports development, aims to enhance long-term brand equity. This social responsibility angle may appeal to ESG-focused investors, though its direct financial impact remains unclear.
Market Dynamics and Competitor Comparison
Steel Partners operates in industries like energy and defense, where peers such as ExxonMobil (XOM) and Lockheed Martin (LMT) remain on major exchanges. A would reveal whether OTCQX trading volumes are sufficient to maintain SPLP’s market relevance.
Conclusion: A Calculated Risk with Mixed Prospects
Steel Partners’ shift to OTCQX appears strategically sound if cost savings and governance efficiencies outweigh liquidity risks. The company’s qualification for OTCQX’s stringent criteria signals financial health, while its $2.3 billion market cap (as of May 2025) suggests scale. However, the loss of SEC reporting obligations may deter institutional investors who prioritize regulatory oversight.
Investors should monitor two key metrics: daily trading volume on OTCQX to assess liquidity, and price stability relative to its pre-delisting performance. If SPLP/SPLPP can maintain trading activity comparable to NYSE levels, the move could be a win. Otherwise, it may reflect a retreat from mainstream visibility—a gamble that could backfire in volatile markets.
In sum, Steel Partners has chosen a path that prioritizes cost efficiency and flexibility. For investors, the decision comes down to whether they believe the company’s diversified portfolio and governance practices will compensate for reduced market prominence. Time—and trading data—will tell.
