Definition of Over The Counter Market



Over the counter market or OTC is a market place where two parties can trade securities without involving the exchange. In other words, it is not centralized like exchanges and due to this reason they attract less regulatory requirements and less transparency is needed as compared to transactions in an exchange.

 


The transactions are facilitated by the market makers who process the transaction electronically without informing the public of the price at which the transaction was closed. OTC market has however some risks attached to it. For example, a counter party might not show up for payment.

 

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