Over the counter: Difference between revisions
imported>Administrator (CSV import) |
imported>Doug Williamson m (Spacing 21/8/13) |
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(OTC). | (OTC). | ||
Direct dealing between counterparties - for example corporates and banks - which allows for tailoring of financial contracts but which also exposes the parties to credit risk. | Direct dealing between counterparties - for example corporates and banks - which allows for tailoring of financial contracts but which also exposes the parties to credit risk. | ||
Exchange trading is the alternative to OTC dealing. Exchange traded instruments are standardised, and less flexible, but the interposition of the exchange substantially reduces credit risk. | Exchange trading is the alternative to OTC dealing. Exchange traded instruments are standardised, and less flexible, but the interposition of the exchange substantially reduces credit risk. | ||
More specifically, this is a market for the trade of securities that are not listed on the stock exchange consisting of bilateral dealing contracts between brokers. As opposed to an organised stock exchange, prices on the OTC markets are set by direct negotiation between dealers and not by an auction system. | More specifically, this is a market for the trade of securities that are not listed on the stock exchange consisting of bilateral dealing contracts between brokers. | ||
As opposed to an organised stock exchange, prices on the OTC markets are set by direct negotiation between dealers and not by an auction system. | |||
The OTC market is a market for companies which do not fulfil the listing requirements of the official stock exchange markets, or for derivatives or other financial instruments that do not have a liquid market. | The OTC market is a market for companies which do not fulfil the listing requirements of the official stock exchange markets, or for derivatives or other financial instruments that do not have a liquid market. | ||
== See also == | == See also == | ||
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* [[Security]] | * [[Security]] | ||
* [[Stock]] | * [[Stock]] | ||
Revision as of 14:45, 21 August 2013
(OTC).
Direct dealing between counterparties - for example corporates and banks - which allows for tailoring of financial contracts but which also exposes the parties to credit risk.
Exchange trading is the alternative to OTC dealing. Exchange traded instruments are standardised, and less flexible, but the interposition of the exchange substantially reduces credit risk.
More specifically, this is a market for the trade of securities that are not listed on the stock exchange consisting of bilateral dealing contracts between brokers.
As opposed to an organised stock exchange, prices on the OTC markets are set by direct negotiation between dealers and not by an auction system.
The OTC market is a market for companies which do not fulfil the listing requirements of the official stock exchange markets, or for derivatives or other financial instruments that do not have a liquid market.
