OTC (Over-the-counter, finance)

OTC means that a transaction does not pass through a centralised exchange or intermediary. Banks and financial institiutions often prefer to trade OTC due to the immense flexibility and customisability the negotiated contracts and instruments offer. Traded instruments include Bond (Finance), swap, options and forwards (the OTC counterpart of a future). In fact the OTC market is of a greater significance than its exchange based counterpart, accounting for multiple hundreds of trillions of dollars each year.


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