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Glossary

Over-the-counter (OTC)

Educational guideSeptember 2026

Glossary entry

Over-the-counter trading takes place through dealers or counterparties rather than a centralized exchange order book. OTC markets include many bonds, currencies, and derivatives, as well as some shares. Terms may be standardized or negotiated. Reporting, clearing, collateral, and regulatory requirements vary, so OTC does not itself mean that a transaction is unregulated.

Illustrative example

A company arranges a tailored currency forward with a bank for a future payment. The amount and maturity can match its commercial exposure.

What to consider

Assess the counterparty, documentation, price transparency, and exit terms. An OTC instrument may be difficult to value or unwind.

General information, not a personal recommendation. Product availability, rights, and obligations are determined by the relevant provider, jurisdiction, and approved agreements.

Further reading

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