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1. OVER THE COUNTER
MARKET
Presented by: Pawan Kumar Negi

2. DEFINITION
 Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without any
supervision of an exchange.
 A decentralized market, without a central physical location, where market participants trade with
one another through various communication modes such as the telephone, email and proprietary
electronic trading systems.
 In an OTC market, dealers act as market makers by quoting prices at which they will buy and sell a
security or currency
 OTC markets are less transparent than exchanges and are also subject to fewer regulations

3. OVER THE COUNTER MARKET
CHARACTERISTICS
Heavy Price competition
Price and Execution Quality Varies
Easier for Fraudulent Firms to Enter
Trading Firm is the Counterparty

4. Must know
 OTC provide –
 Direct interaction between client and intermediary
 Contract uncontrolled by a cleaning house
 Tailor made contract
 Long term hedging instrument

5.  ATTENTION –
 This market is not transparent
 Once entered into a transaction, it is very difficult to reverse
 Margin are not about to decrease, since contracts are not standard
(i.e intermediaries try to keep contract highly tailor made then not
competitive)