Over-the-counter (OTC) is a security traded in some context
other than on a formal exchange such as the NYSE
, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network.
Read more: Over-The-Counter (OTC) Definition | Investopedia http://www.investopedia.com/terms/o/...#ixzz3yNw8YM6T
Counter party risk needs to be considered when trading OTC instruments ie is the party on the other side good for their obligations - what would happen to your trade/equity if the counter party failed?