One of the forms of transaction and trading activities that often occur in the financial world is Over-The-Counter or OTC.
In a financial context, OTC is often used to describe financial instruments or assets traded directly between the parties involved without going through a regulated exchange or exchange.
In OTC trading, including crypto assets, transactions are carried out directly between sellers and buyers, usually through intermediaries such as banks, brokers, or other financial institutions.
So, to better understand what OTC means in trading, its advantages and disadvantages, and OTC features on INDODAX, see the following review.
What is OTC?
OTC or Over-The-Counter is a financial/trade transaction outside a centralized exchange or market.
Parties involved in OTC can negotiate the price, amount, terms, and transaction completion time.
OTC trading involves direct transactions between sellers and buyers, often through intermediaries such as banks, brokers, or other financial institutions.
In OTC trading, the price, volume, terms, and transaction completion time can be negotiated between the parties involved.
Financial instruments traded OTC include private bonds, derivatives (options and futures), foreign currency (forex), commodities, and crypto derivative instruments.
OTC trading can also include banking transactions, such as interbank loans and foreign exchange trading.
OTC trading is carried out outside the exchange and does not go through the same process as trading on a stock exchange or commodity market.
OTC trading involves direct transactions between parties without going through a regulated exchange or centralized trading venue.
In contrast to trading on the stock exchange or commodity market, where transactions occur through a centralized mechanism, OTC trading allows parties to transact directly.
OTC Tradable Products
Understanding products that can be traded OTC (Over-the-Counter) is important in trading and investing activities.
It is important to understand OTC products because of the wider availability of instruments, flexibility in terms and conditions, lower liquidity, higher risk and security, and different investor protections.
Understanding which products can be traded OTC will be the key to making smart trades and successful investments.
This will help to take advantage of opportunities, manage risk wisely, and make more informed decisions.
The following are some products that can be traded OTC, including:
1. Unregistered shares
One example of a product that can be traded on an OTC basis is shared that are not listed on the stock exchange.
Typically, these shares are known as “over-the-counter shares” or “non-registered shares.”
Some of the characteristics of OTC stocks, namely company shares that are not listed on the stock exchange, trading through electronic trading systems, lack of openness and transparency, lower liquidity, and a higher level of risk.
2. Private bonds
One of the products that can be traded OTC also includes private bonds.
Private bonds are issued by companies, local governments, or other entities not listed on a stock exchange or centralized market.
Some characteristics of private bonds traded on an OTC basis are bond issuers, OTC transactions, limited liquidity, credit risk, and negotiating terms and prices.
Derivative products are a type of product that can be traded OTC or Over-The-Counter.
Derivatives are financial instruments whose value is derived from the underlying asset, such as stocks, bonds, indices, currencies, or commodities.
Several types of derivatives that can be traded on an OTC basis include forward contracts, swaps, options, and forward contracts.
One type of product that can be traded on an OTC basis is currency or foreign exchange (forex).
OTC currency trading involves exchanging one currency for another.
Several matters related to OTC currency trading, namely the foreign exchange market, high liquidity, currency pairs, speculation, hedging, risk, and volatility.
One type of product that can be traded on an OTC or Over-The-Counter basis is a commodity.
Commodities are basic goods or products that can be traded, such as oil, natural gas, precious metals, agricultural products, etc.
Some things related to trade OTC commodity dreams are types of commodities, OTC futures, spot trading, hedging, and speculation.
OTC in the Crypto World?
OTC in the crypto market is the Over-The-Counter trading of cryptocurrencies which is similar to OTC in traditional financial markets but in the context of cryptocurrencies.
Cryptocurrency trading will usually occur outside a centralized crypto exchange or exchange on OTC crypto.
Some things related to OTC in crypto are direct transactions, greater liquidity and trading volume, maintaining the privacy and fast settlement, and offering special prices.
As for OTC crypto trading, it often involves larger trading volumes and requires higher liquidity compared to regular trading on crypto exchanges.
Several contributing factors are large trading volumes, high liquidity, adjusted prices, and privacy and security.
On the other hand, OTC crypto trading can give traders and investors the opportunity to get a better price or even a discount from the current market price.
This is because OTC crypto trading involves direct negotiations between the buyer and the seller, which allows them to reach an adjusted price agreement.
Several factors can influence this, including large trading volumes, better liquidity, special market conditions, privacy, and special conditions.
Advantages and Disadvantages of OTC
Understanding the advantages and disadvantages of OTC (Over-the-Counter) is very important before engaging in OTC trading or investing.
It’s important to note that OTC isn’t right for everyone, and the risks and benefits should be weighed carefully.
Before engaging in OTC trading, it is advisable to do thorough research, partner with a trusted party, and consider your investment objectives and risk tolerance.
Here are some of the advantages of OTC trading that you need to know, including:
1. It Makes it possible to trade larger volumes
One of the main advantages of OTC trading is the ability to trade larger volumes.
Some reasons OTC trading allows for greater trading volumes are higher liquidity, direct transactions between the parties involved, price adjustments, privacy, and security.
2. Get a better price or discount
Another advantage of OTC trading, namely the ability to get a better price or a discount from the current market price.
There are several reasons why OTC trading can provide better prices or discounts, including price negotiations, flexible liquidity, special market conditions, and privacy and special conditions.
3. Avoid high transaction fees on exchanges
Another advantage of OTC trading is avoiding the high transaction fees associated with trading on exchanges.
Some reasons OTC trading can help reduce transaction costs are low or no exchange fees, flexibility in setting fees, avoiding wide spreads, and the ability to handle large volumes.
On the other hand, OTC also has some drawbacks that need attention, including:
4. Lack of transparency
One of the main drawbacks of OTC trading, namely the lack of transparency compared to trading on centralized exchanges.
Some points to note regarding the lack of transparency in OTC trading are limited market information, no real-time price monitoring, the potential for market manipulation, and a lack of regulatory standards.
5. Lack of regulation and protection
One of the disadvantages of OTC trading is the need for more regulation and protection compared to trading on centralized exchanges.
Several points that need to be considered regarding the lack of regulation and protection in OTC trading are the lack of regulatory oversight, limited laws and consumer protection laws, and information opacity.
6. Higher risk and volatility
OTC trading has some drawbacks related to higher risk and volatility than centralized exchanges.
Several points need to be considered regarding risk and volatility in OTC trading: liquidity risk, high price volatility, and low information transparency.
7. The possibility of fraud and manipulation
One of the disadvantages of OTC trading, namely the possibility of fraud and manipulation.
Several points related to this issue need to be considered: the lack of regulatory oversight, transparency, consistent standards and practices, and legal protection.
I need to know also; the INDODAX platform has also provided access to OTC features which can be tried from now on.
What is INDODAX OTC?
INDODAX OTC will assist in the OTC transaction process by adhering to strict security and privacy procedures.
Following are some of the benefits that can be obtained when making OTC transactions at INDODAX, including:
1. Minimum Transaction IDR 1 Billion
INDODAX OTC sets a minimum transaction of IDR 1 billion, allowing you to make large transactions.
2. Position in OTC Trading
Through INDODAX OTC, you can buy and sell large amounts of crypto assets and get the best offers.
3. Best Prices with Minimal Slippage
In OTC transactions at INDODAX, you can get the best price according to the spot market price with minimal slippage risk when making large transactions.
4. Personal Service (1-on-1)
Personal consultation and transaction support that suits your needs in buying and selling crypto assets are also available on the OTC service from INDODAX.
5. Transaction Flexibility
Fast and safe facilities for you in buying and selling crypto assets in large quantities are also provided by INDODAX OTC.
6. Available for Various Crypto Assets
The INDODAX OTC service can be used for various crypto assets, including Bitcoin, Ethereum, Binance Coin, Ripple, USDT, and USDC. INDODAX also continues to expand the choice of crypto assets available to meet your trading needs.
In conclusion, OTC or Over-The-Counter trading can be an attractive alternative for investors and traders who want to trade larger volumes and get better prices.
OTC trading can be a profitable option because of larger trade volumes, better prices, wider skills and access, and greater flexibility.
However, before jumping into OTC trading, it is important to understand the risks and drawbacks of this type of trading.
Some points that need attention, among others, are lack of transparency, low liquidity, lack of regulatory oversight, and high risk of volatility.
However, it is important to note that to use the INDODAX OTC service; you must visit the official INDODAX website and follow the specified steps.
Make sure you fully understand the terms, policies, and procedures that apply before making a transaction.
With the INDODAX OTC service, you can optimize your crypto asset trading experience in large quantities by utilizing the facilities and security provided.
You can visit this page for more information and to access INDODAX OTC services.