Otc (over-the-counter market, also known as over-the-counter market), OTC refers to equity transactions in markets other than stock exchanges.
The establishment of OTC market in China can provide a platform for millions of enterprises that do not meet the listing requirements, which is conducive to the development of small and medium-sized enterprises and also helps to form a multi-level capital market in China. OTC market in English, OTC market in Chinese.
Over-the-counter trading has no fixed place, no prescribed members, no strictly controllable rules and regulations, no prescribed trading products and restrictions, mainly one-on-one trading by counterparties through private consultation. Over-the-counter transactions are mainly in the financial industry, especially in countries with developed financial institutions such as banks. At present, the largest over-the-counter market is in Singapore, which not only provides various foreign exchange, index and futures trading, but also provides Morgan Stanley, Taiwan Province Province, Hongkong and other reference indexes for investment.
Unique features:
(1) OTC market is a decentralized intangible market. There is no fixed centralized trading place, but a number of independent securities institutions conduct transactions, mainly through telephone, telegraph, fax and computer networks.
(2) The OTC market is organized by the market maker system. The difference between OTC market and stock exchange is that the brokerage system is not adopted, and investors directly trade with brokers.
(3) OTC market is a market with a wide variety of securities and securities institutions, mainly stocks and bonds that have not been approved for listing on the stock exchange. Due to the variety of securities, each securities institution only deals in several kinds of securities on a fixed basis.
(4) OTC market is a market where securities are traded through bargaining. In the OTC market, securities are bought and sold on a one-to-one basis, so it is impossible for many buyers and sellers to buy and sell the same securities at the same time, and there is no public bidding mechanism. The price determination mechanism of OTC market is not open bidding, but negotiation between buyers and sellers.
Specifically, a securities company simultaneously hangs out the buying price and selling price of the securities it operates, unconditionally buys the securities at the buying price and sells the securities at the selling price. The final transaction price is the net price excluding commission determined by both parties through consultation on the basis of quotation. Brokers can adjust the listing price at any time according to market conditions.
(5) The management of OTC market is looser than that of stock exchange. Due to the scattered OTC market, lack of unified organization and articles of association, it is not convenient for management and supervision, and its trading efficiency is not as good as that of the stock exchange. The Nasdaq market in the United States connects the OTC markets scattered all over the country into a network with the help of computers, which greatly improves management and efficiency.