Two parties discussing terms under the shade of a tree representing OTC markets, illustrating the absence of central exchanges

Understanding Over-the-Counter Markets: Functions, Risks, and a Real-World Example

Business Finance

What are Over-the-Counter Markets? Over-the-counter (OTC) markets represent an essential financial ecosystem where participants transact securities, instruments, commodities, and currencies directly between two parties without a centralized exchange or intermediary. This decentralized nature sets OTC markets apart from traditional auction market systems in which prices are determined through bids and

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