What is Over-the-Counter (OTC) trading?

• Over-the-counter trading can involve equities, debt instruments, and derivatives.
• A decentralized venue with no physical location, unlike a standard exchange, which is a centralized network of transactions.
• Over-the-counter (OTC) securities are traded directly between counterparties without being listed on an exchange and facilitated by a dealer or broker.

 

The trading is online or by phone, with prices not always available to the public.

 

Companies can jump from the OTC market to the Standard Exchange as long as they meet the listing and regulatory requirements.

 

Two major networks for over-the-counter securities trading.

1. Over-the-Counter Bulletin Board (OTCBB) regulated by the Financial Industry Regulatory Authority (FINRA).

2. OTC Markets Group, the largest operator of over-the-counter (OTC) trading.

Over-the-Counter Markets Group (OTC Markets Group)

The OTC Markets Group operates some of the most well-known networks, such as the Best Market (OTCQX), the Venture Market (OTCQB), and the Pink Open Market. Each of them has different qualification, financial requirements and application process.

Advantages of listing on OTC：

For companies who do not meet the requirements of the NASDAQ main board, the company first landed in the U.S. capital market at a lower cost, and then to improve. Afterward it becomes an important springboard for formal listing.