Compared with the way of stock exchange trading, stock trading activities outside the stock exchange can be called OTC trading. Over-the-counter market can't realize public bidding, and its price is reached through negotiation. Compared with listing on the stock exchange, over-the-counter trading is less regulated, more flexible and more convenient.
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OTC market refers to the market formed by buying and selling securities in a large number of scattered securities counters and major telecommunications facilities of securities institutions such as investment banks.
Over-the-counter market provides a place for circulation and transfer of government bonds, financial bonds and stocks that are publicly issued according to relevant laws and regulations but cannot be listed and traded on the stock exchange for the time being, provides necessary conditions for the liquidity of these securities, and provides investors with opportunities to realize and invest.
Over-the-counter market has the characteristics of relatively low listing standards, usually no requirements for enterprise scale and profitability, low requirements for information disclosure, loose supervision, and the trading system usually adopts the market maker system.
A stock exchange is a market for buying and selling stocks, corporate bonds, government bonds, treasury bonds, negotiable certificate of deposit and other securities. A stock exchange is a tangible place for centralized securities trading, which is established with the approval of the competent securities department of the government according to the relevant national laws.
The way of securities trading can be understood from different angles. According to the relationship between the signing of the trading contract and the actual delivery, the ways of securities trading include spot trading in the short-term capital market, forward trading and futures trading. Securities repurchase transactions have the characteristics of spot trading and forward trading. Investors who buy and sell securities are allowed to conduct credit transactions with operators.
Compared with the over-the-counter market of the stock exchange, it can broaden the financing channels, improve the financing environment of small and medium-sized enterprises, provide a place for circulation and transfer of securities that cannot be listed on the stock exchange, and provide a risk-stratified financial asset management channel.