Foreign Exchange is an OTC Market
OTC Market is a market where equity, securities, corporate bonds, government securities and certain derivative products are traded. OTC Bulletin Board and OTC Link LLC are operates within the OTC Market.
OTC Bulletin Board: It is an electronic inter-dealer quotation system that displays quotes, volume information and last-sale price for equity securities are not listed on a national securities exchange.
Securities quoted on the OTC BB include domestic, foreign and American depository receipts (ADRs).
OTC Link LLC: It is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information in exchange-listed securities. OTC equity securities, foreign equity securities and certain corporate debt securities. Other services provided by OTC Link LLC are
- Subscribers the ability to send and receive trade messages
- Allowing them to communicate for the purpose of negotiating trades
It refers to the process of how securities are traded for companies not listed on a formal exchange. Securities that are traded over-the-counter are traded via a dealer network as opposed to on a centralized exchange. … Companies with OTC shares may raise capital through the sale of stock.
OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such products. Products traded on the exchange must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in trading. The OTC market does not have this limitation. They may agree on an unusual quantity, for example. In OTC, market contracts are bilateral (i.e. the contract is only between two parties), and each party could have credit risk concerns with respect to the other party. The OTC derivative market is significant in some asset classes: interest rate, foreign exchange, stocks, and commodities.
