OTC Full Form – What is the Full form of OTC?
OTC Full Form – Over the Counter or OTC is a type of trading between two parties which does not need or have the supervision of an exchange. This is in total contrast with exchange trading, in which an exchange is required for trading. It is also called off-exchange trading. Exchange trading helps maintain the liquidity of the economy by being transparent whereas in OTC, the price and the exchange are not publicly disclosed. OTC can only be done bilaterally i.e. between two parties only. Exchange trading has standardisation in order to maintain the transparency of the trade. OTC does not have such a limitation. Hence, the trade can be done in unusual quantities too. This is OTC’s biggest advantage. However, it does have a big disadvantage that each party can have credit risk concerns over the other party due to the lack of transparency. Most of the trade in the U.S. takes place via OTC.