OTC stands for Over-the-Counter, which refers to the process of trading securities directly between two parties through a broker-dealer network, rather than on a centralized exchange. OTC securities are not listed on formal exchanges like the New York Stock Exchange (NYSE) or NASDAQ. Instead, they are traded directly between buyers and sellers through a decentralized market. OTC trading offers flexibility in terms of the types of securities that can be traded and can include stocks, bonds, derivatives, and other financial instruments. OTC trading is typically conducted electronically, and prices and terms are negotiated between the parties involved.
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