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Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
Exchange Traded vs OTC Markets
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Exchange Traded vs OTC Markets

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  • 1. EXCHANGE TRADED VS OTC MARKETS Prepared by: Walid Saafan
  • 2. Exchange traded market  Stock trades conducted via centralized place.  Examples: NYSE, The Egyptian Exchange, ..  Buy/ Sell is conducted through the exchange; no direct contact between seller & buyer; Exchanges acting as a counterparty to all trades. 16 September 2013 2 Exchange taraded vs otc markets
  • 3. 16 September 2013Exchange taraded vs otc markets 3
  • 4. Exchange traded market advantages  Removes counterparty risk; trade obligations guaranteed.  All trade flow through one central place; price quoted for an instrument is always the same regardless of the size of trading entity.  All firms that offer exchange traded products must be members and registered with the exchange; greater regulatory, safer place for individuals trade. 16 September 2013 4 Exchange taraded vs otc markets
  • 5. Exchange traded market disadv.  Higher cost due to the regulatory constraints.  Increased transaction cost due to the exchange fees and commissions. 16 September 2013 5 Exchange taraded vs otc markets
  • 6. OTC market  No centralized place where trades are made.  Market is made up of all participants in the market trading among themselves.  Example FOREX. 16 September 2013 6 Exchange taraded vs otc markets
  • 7. OTC market 16 September 2013Exchange taraded vs otc markets 7
  • 8. OTC – advantage  Heavy competition to attract the most traders and trading volume to their firm.  Lower transaction cost compared to Exchange market.  Firms can set up their instrument prices.  The quality of execution varies from firm to firm for the same instrument. 16 September 2013 8 Exchange taraded vs otc markets
  • 9. OTC – disadvantage.  Some firms offer trading to operate in dishonest way due to the low barriers to enter the market and lack of heavy oversight.  The firm ‘s account balance is affected by the firm you traded with. 16 September 2013 9 Exchange taraded vs otc markets
  • 10. THANK YOU Source: www.informtrades.com

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