Over-the-Counter

Definition 1

OTC. A security which is not traded on an exchange, usually due to an inability to meet listing requirements. For such securities, broker/dealers negotiate directly with one another over computer networks and by phone, and their activities are monitored by the NASD. OTC stocks are usually very risky since they are the stocks that are not considered large or stable enough to trade on a major exchange. They also tend to trade infrequently, making the bid-ask spread larger. Also, research about these stocks is more difficult to obtain. also called unlisted.

Definition 2

The computer and phone system through which over the counter (as well as listed) securities are traded.

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Related Terms

OTC Bulletin Board, auction market, Autex, Forex, intrastate offering, make a market, market price, Nasdaq, National Market System, National Securities Trade Association, off-board, outside broker, outside market, Pink Sheets, spread, stock market, street broker, third market

'Over-the-Counter ' appears in the definitions of these other terms on BusinessDictionary.com




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