Over the Counter (OTC) trading involves the direct exchange of financial instruments such as stocks, bonds, derivatives, and commodities between two parties, bypassing a centralized exchange. In OTC markets, buyers and sellers trade directly with each other or through intermediaries such as brokers or dealers. Unlike exchange-traded markets where prices and transactions are publicly visible, OTC transactions are typically negotiated privately. This provides flexibility in terms of pricing and transaction terms, making OTC markets suitable for customized or non-standardized instruments. OTC markets are prevalent in various financial sectors, including foreign exchange, fixed income securities, and derivatives. For instance, the foreign exchange (Forex) market is primarily OTC, with traders buying and selling currencies directly with each other or through banks and brokers..
