OTC security
Noun: An OTC security is a financial instrument, such as a stock or bond, that is traded directly between two parties in a decentralized market, rather than on a formal, centralized exchange like the New York Stock Exchange (NYSE) or NASDAQ.
This term is used specifically in finance and investing to describe the nature of a security's trading venue. - The company's shares are an OTC security, so they can be harder to buy and sell than those listed on major exchanges. - Investors should be aware that OTC securities often carry higher risks and lower liquidity.
- "to be traded as an OTC security": This phrase describes the method of transaction for the financial instrument.
- After being delisted from the exchange, the bond began to be traded as an OTC security.
- Over-the-counter (OTC): (Adjective) The full form describing the market or method of trading.
- The over-the-counter market includes many small-cap stocks.
- OTC market: (Noun Phrase) The decentralized network where OTC securities are traded.
- Exchange-traded security: (Noun Phrase) The antonym; a security traded on a formal, centralized exchange.
- Unlisted security: A security not listed on a formal stock exchange.
- Off-exchange security: A security traded outside of a regulated exchange.
OTC securities are typically associated with smaller, younger, or financially distressed companies. Trading information (like prices and volume) for OTC securities is less transparent than for exchange-traded securities, which can increase investment risk.
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a security traded in the over-the-counter market
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