Many market players are abandoning traditional exchanges in favor of OTC trading. Larger deals, less commission, more stable prices. But when entering this area, you need to play by special rules and be prepared for serious risks.

In 1913, book publisher Arthur Elliot and financier Roger Babson founded the National Quotation Bureau (NQB). The main task of the company was to inform potential investors about the shares of companies that were not included in any exchange listing. For a long time, Elliot and Babson published a newsletter on pink paper, where they indicated the name of the company, its quotes and contact details of brokers. Only at the end of the twentieth century, NQB began broadcasting quotes online. Over the years, the quotation bureau has changed its name several times. Today, it is better known as the OTC Markets Group. This is the largest OTC trading platform where all purchases and sales are conducted electronically; it is known that more than 1600 brokerage companies are connected to it.

OTC trading stands for Over-the-Counter and literally means “bypassing the counter”. This term refers to over-the-counter trading, when the seller and the buyer enter into a transaction directly with each other.

OTC trading in the digital industry

In 2018, OTC trading has become popular on the cryptocurrency market. Its advantage lies in the fact that usually on the exchanges, to conduct a large transaction, it is necessary to make many small transactions, and due to the high volatility, the rate can change each time.

OTC trading often involves one big trade. At the same time, as a rule, the transaction is not recorded in the order book and is not displayed publicly, which completely guarantees the confidentiality of the contract for both parties.

Daily volumes on OTC trades are much higher than in regular exchange trading. EXPi provides services for OTC transactions.

“We launched our OTC business in addition to the exchange business as we saw many institutional investors use the OTC market to enter crypto trading,” said Konstantin Kolokolov, Chief Operating Officer EXPi

Despite the fact that OTC trading is considered to be the lot of large players, this form of trading is also available for average investors.

Several years after the appearance of bitcoin, all transactions with the main digital coin took place only on the OTC market, and only then did centralised exchanges appear. But OTC platforms, where users can buy cryptocurrencies from each other for small amounts, remain.

There are special OTC platforms for large transactions. One such platform is EXPi. Unlike p2p sites, EXPi is not just an intermediary. As an official service, EXPi takes responsibility for the transactions of clients who risk large sums of money and sets a number of rules for their safety. Indeed, in the OTC market, the integrity of brokers is extremely important, who check counterparties and help clients avoid dubious or even criminal transactions. Basically, OTC platforms work only with top cryptocurrencies BTC, ETH, LTC.

OTC platforms have extensive connections in the crypto industry, so they can provide liquidity and order execution for large clients and companies. Typically, OTC transactions begin with a request from the buyer, then a search for counterparties is carried out, as soon as it is located, the buyer reports the size of the transaction and the asking price. The seller responds with his own price. Often there is a splitting of one order between many exchanges, it is also possible that positions are insured with their subsequent sale in shares.

For many who acquired large amounts of cryptocurrency at the time it first appeared, OTC trading has become an excellent opportunity to quickly sell the entire amount at a very competitive price. Indeed, at times of peak value of the main digital coin, not all exchanges have a sufficient level of liquidity.