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| (OTC).
| | Any accounting cost that cannot be traced directly to a product or service is known as an overhead. |
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| Direct dealing between counterparties - for example non-financial corporates and banks - which allows for tailoring of financial contracts but which also exposes the parties to credit risk.
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| Exchange trading is the alternative to OTC dealing.
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| Exchange traded instruments are standardised, and less flexible, but the interposition of the exchange substantially reduces credit risk.
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| Collateral requirements in OTC markets have reduced the historical differences in credit risk between exchange traded and OTC markets.
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| 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.
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| 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.
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| 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.
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| == See also == | | == See also == |
| * [[Collateral]] | | * [[Administration expenses]] |
| * [[Corporate]] | | * [[Indirect costs]] |
| * [[Counterparty]]
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| * [[Credit risk]]
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| * [[Exchange traded]]
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| * [[Exchange-traded option]]
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| * [[Foreign exchange swap]]
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| * [[Listing]]
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| * [[Margin]]
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| * [[NASDAQ]]
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| * [[Security]]
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| * [[Stock]]
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| ===Other links===
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| [http://www.treasurers.org/otc European regulation of OTC derivatives: Implications for non-financial companies – ACT briefing note, Updated May 2014]
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| [[Category:Corporate_financial_management]]
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| [[Category:Risk_frameworks]]
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Revision as of 14:20, 23 October 2012
Any accounting cost that cannot be traced directly to a product or service is known as an overhead.
See also
