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

Over-the-counter (OTC) trading refers to the direct exchange of financial instruments between parties without using a centralized exchange. Instead, transactions occur through dealer networks or electronic platforms, offering greater flexibility and customization.

Key Features of OTC Trading:

✔ No Central Exchange – Trades occur directly between buyers and sellers.
✔ More Flexible Contracts – Prices, terms, and conditions can be customized.
✔ Used for Various Assets – Includes stocks, forex, bonds, and derivatives.

OTC vs. Exchange Trading

• OTC Trading – Decentralized, flexible, and private transactions.
• Exchange Trading – Regulated, standardized contracts with transparent pricing.

Forex is one of the largest OTC markets, operating through a global network of banks, brokers, and institutions.