OTC (Over-the-Counter) stocks differ from those listed on major exchanges like the NYSE or NASDAQ in several key ways, mainly in how they’re traded, regulated, and valued. Unlike exchange-listed stocks, which trade on centralised and highly regulated marketplaces, OTC stocks are traded directly between parties through a network of brokers and dealers. This decentralised structure often results in lower transparency and less liquidity.

Companies trading OTC are usually smaller, newer, or unable to meet the strict listing requirements of major exchanges, such as minimum share price, market capitalisation, or reporting standards. Because of this, OTC stocks tend to be riskier investments. Financial disclosures are often limited, making it harder for investors to analyse a company’s true performance.

Major exchange-listed companies, on the other hand, must follow rigorous financial reporting and compliance standards set by regulators like the SEC. Their shares are traded in a transparent, centralised market where prices reflect broad investor demand and supply. This leads to higher liquidity, tighter spreads, and better investor protection.

While OTC stocks can offer opportunities for high returns, they also carry a greater chance of fraud and price manipulation. Investors should research carefully, verify company filings, and use reputable brokers. In short, major exchange stocks provide stability and oversight, while OTC stocks offer higher risk but potential for speculative gains.

OTC (Over-the-Counter) stocks differ from those listed on major exchanges like the NYSE or NASDAQ in several key ways. OTC stocks are traded directly between parties through a dealer network instead of a centralised exchange. They often include smaller, newer, or financially unstable companies that don’t meet the strict listing requirements of major exchanges. Because of this, OTC stocks tend to have lower trading volumes, wider bid-ask spreads, and less price transparency. They also carry a higher risk due to limited financial disclosure and reduced regulatory oversight. In contrast, NYSE and NASDAQ-listed companies are more established, must follow strict reporting standards, and generally offer greater liquidity and investor protection, making them safer for most investors.