Quick Definition

The Over-The-Counter (OTC) market refers to a decentralized market where trading of financial instruments, including stocks, bonds, and derivatives, is conducted directly between two parties without a central exchange.

Examples

• 1Trading of small or emerging company stocks that are not listed on major stock exchanges.
• 2Negotiating a derivative contract directly between a financial institution and a client.
• 3Buying corporate bonds from a broker who is offering them outside of the major bond exchanges.
• 4Private transactions in foreign currencies between banks and their clients.

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