Over-the-Counter
a.k.a. OTC, Off-exchange
Trading directly between two parties instead of on a central exchange.
Over-the-counter (OTC) trading happens straight between buyer and seller, or through a dealer, without a central exchange in the middle. Spot forex is the giant example: there is no single building or order book, just banks and brokers quoting prices to each other and to clients.
The upside is flexibility, round-the-clock access and custom deals. The downside is that prices can differ slightly from dealer to dealer and you are exposed to the firm on the other side of your trade (counterparty risk).
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