What is Over-the-Counter Privileges?

1296 reads · Last updated: December 5, 2024

Over-the-Counter (OTC) Privileges refer to the rights and privileges to trade securities outside of formal stock exchanges. These transactions typically occur in the over-the-counter market, where parties can negotiate prices and trading terms directly, without being bound by the regulations of an exchange. OTC privileges provide investors with greater flexibility to trade securities that are not listed on an exchange, such as stocks of smaller companies, bonds, and derivatives. While this trading method offers flexibility, it may also involve higher liquidity risks and information asymmetry risks.

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