Definition

Noun: A decentralized financial market where securities (such as stocks, bonds, and derivatives) are traded directly between two parties, typically via telephone and computer networks, rather than on a centralized, physical exchange floor. It is characterized by negotiated prices and less formal regulation compared to formal exchanges.

Usage

The term is used to describe the trading environment for securities not listed on a major national exchange like the NYSE or NASDAQ. It refers to the system and network of dealers who facilitate these trades.

Examples

• Noun:
  • Many small companies' shares are traded on the over-the-counter market.
  • The bond is not listed on an exchange; you can buy it through the over-the-counter market.

Advanced Usage

• "to trade over-the-counter": This verb phrase describes the action of buying or selling securities in this market.
  • The dealer specializes in securities that trade over-the-counter.

Variants and Related Words

• OTC market: A common abbreviation for "over-the-counter market."
• Over-the-counter (OTC): Used as an adjective to describe securities, trading, or transactions that occur in this market.
  • OTC stocks | an OTC transaction

Synonyms

• Unlisted securities market: A term emphasizing that the traded securities are not listed on a formal exchange.
• Dealer market: A term highlighting the role of dealers as intermediaries who quote prices and facilitate trades.

Related Phrases

• OTC bulletin board (OTCBB): An electronic quotation system for OTC securities.
• Pink sheets: Another system for quoting prices of OTC securities, often for very small or speculative companies.

Noun

1. a stock exchange where securities transactions are made via telephone and computer rather than on the floor of an exchange