A common term utilised to describe the market for shares that are not traded on any of the U.S. Exchanges. Regulated by the NASD, the OTC market is comprised of a network of broker/dealers who complete transaction via telephone or computer rather than in a centralised marketplace. The OTC brokers are usually referred to as "market-makers" for the particular security they are transacting. A number of OTC issuers are listed in the "pink sheets"(a weekly publication covering OTC securities and their market-makers that is published by the NASD) and/or the "Electronic Bulletin Board", an on line version of the pink sheets for companies registered under the 1934 Exchange Act.
An off-exchange market in which securities transactions are conducted by dealers through a telephone and computer network. The Over-the-Counter or OTC market for short, is made by the trading desks of investment banks. OTC products are tailored to meet specific client needs and can be contrasted with exchange-traded products, which are standardised in terms of amounts (contract sizes), delivery dates (maturities) and terms. The tailored character of OTC products tends to make them more expensive than their exchange traded alternatives.
(Marché au comptoir) A market consisting of a group of brokers, banks and trust companies that are inter-related by a computer network and directly trade securities that are not listed on an exchange. It is a decentralized market, operating on a trade basis rather than an auction based system.