ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Over-the-Counter (OTC) trades for securities are transacted via a dealer network as opposed to on a centralized exchange such as NYSE. Financial markets refer broadly to any marketplace where the trading of securities occurs, including the stock market and bond markets, among others.

Detailed explanation-2: -Over-the-counter (OTC) securities are securities that are not listed on a major exchange in the United States and are instead traded via a broker-dealer network, usually because many are smaller companies and do not meet the requirements to be listed on a formal exchange.

Detailed explanation-3: -Trading Over the counter is also called off-exchange trading, because of the absence of a formal exchange. In general, those companies which do not fulfil the prerequisites of the stock exchange for listing their stocks, trade them over the counter. The trade takes place between two companies or financial institutions.

Detailed explanation-4: -OTC markets are less transparent and have fewer rules than exchanges. All of the securities and derivatives involved in the financial turmoil that began with a 2007 breakdown in the US mortgage market were traded in OTC markets.