Over-the-Counter (OTC) is a type of trading that takes place outside traditional stock exchanges. This form of trading involves the direct exchange of assets between two parties, often with the assistance of an intermediary broker. It is commonly used for large transactions involving cryptocurrencies or other digital assets.
This type of transaction can be advantageous for those who are looking to trade large amounts without exposing their trades to public scrutiny on a centralised exchange, as it allows them to maintain control over the timing and pricing structure of their deal. Additionally, OTC traders also benefit from more flexible terms and lower fees than would typically be available through public markets.
In order to facilitate an OTC trade, participants must agree upon a specific set of instructions which include: the asset being exchanged; the amount being traded; any payment arrangements; and any additional conditions such as lockup periods or limits on further transfers or sales. Once these details have been agreed upon by both parties involved in the transaction, they will then need to find a suitable intermediary broker who has access to their desired asset(s). The broker’s role is then to act as an escrow agent between both sides until all funds have been cleared and transferred successfully.
When it comes time for settlement, there are several options available depending on each party’s preference including wire transfer, cash payments, Bitcoin/Altcoin deposits & withdrawals etc.. It should be noted here that while this method offers many advantages compared with centralised exchanges such as privacy and flexibility in price negotiation but it also carries higher risks due its lack of regulation so caution should always be exercised when engaging in these types of trades .
