Over The Counter (OTC)

OTC stands for “over-the-counter.” It refers to the trading of financial instruments, such as stocks, bonds, commodities, or derivatives, directly between two parties, without the involvement of an exchange or other intermediary.

In contrast to exchange-traded instruments, which are bought and sold on organized exchanges such as the New York Stock Exchange or the Nasdaq, OTC instruments are traded directly between two parties through a network of dealers or brokers. The OTC market is generally less formalized and less regulated than exchange-traded markets, and trades are often conducted through phone or electronic networks.

The OTC market is used for a wide range of financial instruments, including stocks of small companies, bonds issued by private companies or governments, and derivatives such as swaps and options. Trading in OTC instruments can offer greater flexibility and customization than exchange-traded instruments, but it also involves greater counterparty risk, as there is no central clearinghouse to guarantee trades.

OTC trading can take place in a variety of ways, including via electronic trading platforms, phone, or through direct contact with a broker. The size of the OTC market is difficult to measure precisely, but it is estimated to be significantly larger than the exchange-traded market in terms of total volume of trades.

On this page, we list brokers and exchanges that adopt Over The Counter (OTC) model to provide the service.