The trading market of securities and funds can be divided into on-site trading market and off-site trading market. At the specific level, many investors can't tell which is on-site and which is off-site. The following is the OTC market and OTC market compiled by Bian Xiao. What is the definition of OTC market? For reference only, I hope it will help you.
What are OTC market and OTC market?
The market with fixed trading time, fixed place and standardized trading rules is the floor market, which refers to the stock exchanges, mainly referring to the two major stock exchanges in China, Shanghai and Shenzhen. Over-the-counter market is a market formed by buying and selling securities through a large number of scattered securities counters and major telecommunications facilities of securities operating institutions such as investment banks.
Specifically, China's floor trading market refers to Shanghai Stock Exchange and Shenzhen Stock Exchange, which mainly includes the national proxy share transfer system, regional equity trading market, over-the-counter trading market and over-the-counter trading market.
China implements a multi-level capital market system, which is divided into two parts: the Shanghai and Shenzhen main board (the first board) and the Growth Enterprise Market (the science and technology innovation board) belong to the OTC market, while the national agency share transfer system (the third board) and the regional equity exchange market (the fourth board) belong to the OTC market.
What is the definition of OTC market?
OTC market is also called OTC market or OTC market. Together with the exchange, it constitutes a complete securities trading market system. The OTC market is actually an abstract securities trading market composed of thousands of securities companies. In the OTC market, most securities companies are both brokers and self-dealers. They can quickly reach a deal with investors who buy or sell securities at any time through direct contact or telephone or telegram. As self-dealers, brokers have the function of creating markets. Brokers often choose several trading objects according to their own characteristics. As a brokerage securities company, securities companies conduct transactions with securities trading companies for customers. Here, brokers are only agents of customers. He doesn't take any risks and only charges a small fee as compensation.
The biggest difference between OTC and OTC.
1 standardization is different: there are standardized contracts for on-site transactions, but the opposite is true for off-site transactions. Taking futures as an example, contracts in different months have a unified last trading day, delivery date, trading time, price limit and so on. And these terms can be privately agreed in the OTC market.
2 Different levels of supervision: On-exchange transactions are more centralized and easier to supervise because of the unified system, while off-exchange transactions are more decentralized and flexible, which is not conducive to supervision.
Because there is no uniform standard for contracts, the number of OTC contracts is often more abundant, and investors can also specify their own contracts according to their own needs. For example, in the movie "Big Short", the two protagonists want to short the mortgage-backed securities in the market, but because there are no related products in the market, they privately find an investment bank to customize a short product.
What do you mean by OTC market?
OTC market, also known as OTC market or OTC market, refers to the market where securities are bought and sold outside the stock exchange. It is mainly composed of OTC market, tertiary market and tertiary market.
From the organizational form of transactions, the capital market can be divided into exchange market and OTC market. The over-the-counter market is relative to the exchange market, and it is a market for securities trading outside the stock exchange. The physical concepts of traditional on-site market and off-site market are: the transactions in the exchange market are concentrated in the trading hall; The over-the-counter market, also known as "OTC market" or "OTC market", is a market scattered over the counters of securities companies, and there is no centralized trading place and unified trading system. However, with the development of information technology, the way of securities trading has gradually evolved into collecting orders through network system, and then processing them through electronic trading system, and the physical boundary between on-site and off-site is gradually blurred.
At present, the concept of on-site and off-site has evolved into the concept of risk stratification management, that is, different levels of markets make differentiated arrangements for listing or listing conditions, information disclosure system, transaction settlement system, securities product design, investor constraints, etc. according to the risks of listed products, so as to realize vertical stratification of product risks in capital markets.
trait
(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.