OVER-THE-COUNTER (FINANCE)

'Over-the-counter' ('OTC') trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is the opposite of exchange trading which occurs on futures exchanges or stock exchanges.''
An ''over-the-counter contract'' is a bilateral contract in which two parties agree on how a particular trade or agreement is to be settled in the future. For derivatives, these agreements are usually governed by an International Swaps and Derivatives Association agreement.
An ''over-the-counter market'' is a financial market where products are traded over-the-counter.

Contents

Drafting of OTC derivatives

OTC Bulletin Board

External links

Drafting of OTC derivatives

OTC derivatives are documented under master agreements. A master agreement is a document agreed between two parties that sets out standard terms that apply to all the transactions entered into between those parties. Each time that a transaction is entered into, the terms of the master agreement do not need to be renegotiated and apply automatically.

OTC Bulletin Board

In the U.S., over-the-counter trading in stocks is carried out on the OTC Bulletin Board (OTCBB). The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information for various types of equity securities. The OTCBB was founded in 1990 and currently provides access to more than 3300 securities with over 230 market makers. It is ''not'' regulated as a stock exchange. The foreign exchange market is mostly OTC.

External links

★ OTC Bulletin Board - Overview and History

★ Information on OTC CFDs