Cryptocurrency Q&A
Why are OTC stocks not listed on the exchange?
Why are OTC stocks not listed on the exchange?
Bianca
Thu Aug 08 2024
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7 answers
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Could you please explain why over-the-counter (OTC) stocks are not listed on traditional exchanges? Are there any specific regulatory or financial reasons behind this? Do OTC stocks offer unique benefits or drawbacks compared to exchange-traded securities? How does trading in OTC markets differ from trading on exchanges? And finally, what are some of the key factors investors should consider when evaluating OTC stocks?
7 answers
Alessandro
Sat Aug 10 2024
The process of acquiring OTC stocks is thus characterized by a degree of exclusivity and personalized negotiation. Buyers and sellers engage in bilateral discussions, bypassing the conventional exchange structure.
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Martina
Sat Aug 10 2024
OTC stocks, by their very nature, are excluded from formal exchange listings. This implies that they are not traded on regulated platforms where prices are transparent and liquidity is abundant.
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SamuraiWarriorSoulful
Sat Aug 10 2024
Instead, transactions involving OTC securities occur through intermediaries known as market makers. These entities maintain a stockpile of equities and debt instruments, which they offer directly to interested buyers.
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Eleonora
Fri Aug 09 2024
However, it is important to note that the OTC market is inherently less transparent and regulated than exchanges. This can increase the risk of fraud and manipulation, making it essential for investors to conduct thorough due diligence before engaging in OTC transactions.
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BitcoinBaron
Fri Aug 09 2024
Market makers play a pivotal role in facilitating these transactions. They provide the necessary liquidity by maintaining an inventory of securities, thereby enabling buyers to execute their purchases without waiting for a matching order from another party.
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