OTC refers to transactions outside the exchange, also known as OTC. OTC trading targets include stocks, bonds, futures, foreign exchange and other financial products. Over-the-counter transactions are non-standardized transactions. Both parties can freely negotiate the trading conditions, including price, quantity, delivery time, etc. And the transaction process and rules are also very flexible.

Characteristics of OTC trading

1. Flexible trading: The terms of OTC trading can be freely negotiated, and both parties can trade according to their own needs and circumstances, which is very flexible.

2. Low transaction cost: OTC transactions do not need to go through the intermediary of the exchange, so the transaction cost is relatively low, and both parties can save the transaction cost.

3. High transaction risk: Due to the diversification of trading objects in OTC, both parties need to have certain professional knowledge and skills, otherwise it is easy to generate transaction risk.

4. Low transparency of transactions: OTC transactions do not have open trading rules and processes like exchange transactions, and both parties need to negotiate their own trading terms, so the transparency of transactions is relatively low.

Application scenarios of over-the-counter trading

1. futures market: the futures market is one of the important application scenarios of over-the-counter trading, which requires a lot of hedging and hedging transactions, and over-the-counter trading can meet the requirements of flexibility and efficiency of futures trading.

2. Stock market: OTC is also widely used in the stock market. Over-the-counter trading in the stock market includes stock pledge, stock allotment and other trading methods.

3. Foreign exchange market: The foreign exchange market is one of the main application scenarios of OTC trading. Foreign exchange trading needs real-time trading and settlement, and over-the-counter trading can meet the requirements of efficient and flexible foreign exchange trading.

Operating steps of OTC trading

1. Determine the transaction object: The first step of OTC trading is to determine the transaction object, including the transaction variety, transaction quantity and transaction price.

2. Negotiate transaction terms: Both parties need to negotiate transaction terms, including delivery time, settlement method and transaction costs.

3. Signing a transaction contract: both parties to the transaction need to sign a transaction contract to clarify the terms of the transaction and the rights and obligations of both parties.

4. Performance of the transaction: Both parties to the transaction need to perform the transaction according to the transaction contract, including delivery and settlement.

5. Monitoring transaction risks: Both parties to the transaction need to pay close attention to transaction risks and control and respond in time.