What is the OTC market, and how does it differ from traditional stock exchanges? Back to list

Member SinceSep 14, 2022

Posts 100


Mar 14, 2023 a 11:05
The OTC (over-the-counter) market is a decentralized marketplace where traders can buy and sell securities directly between each other without the involvement of an organized exchange. In contrast, traditional stock exchanges, such as the New York Stock Exchange (NYSE) or the Nasdaq Stock Market, have a centralized structure where trading occurs through a formalized system.

In the OTC market, securities that are not listed on exchanges can be traded, such as penny stocks, bonds, and other financial instruments. The lack of formal exchange rules and regulations means that trading in the OTC market can be less transparent and more risky than trading on traditional exchanges.

Additionally, in the OTC market, the prices of securities are determined by negotiations between buyers and sellers, rather than by the supply and demand of an exchange. Market makers, who facilitate trades between buyers and sellers, play a significant role in the OTC market. Overall, the OTC market provides an alternative trading platform for investors seeking to trade securities that are not listed on formal exchanges.

Add Comment

Add your comment