Over-the-Counter (OTC) Trading

What Is Over-the-Counter (OTC) Trading?

Over-the-Counter (OTC) trading is a type of securities transaction that takes place directly between two parties, without the use of an exchange or other intermediary. OTC trades are typically done in large blocks and involve stocks, bonds, derivatives, currencies and commodities. The main advantage of OTC trading is its flexibility; it allows for customized terms to be negotiated between the two parties involved in the trade. This can include things like price, quantity and settlement date.

Another benefit of OTC trading is that it does not require as much capital as traditional exchanges do since there are no listing fees or commissions associated with these transactions. Additionally, because they take place outside of regulated markets such as stock exchanges, they often provide more anonymity than regular market trades which may be beneficial for certain investors who wish to remain anonymous when making investments. Finally, due to their lack of regulation compared to traditional exchanges, OTC trades tend to have lower costs associated with them which makes them attractive for smaller traders looking to make quick profits from short term investments.

See also  Decentralization Ratio

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *