Cryptocurrency Q&A
What is the difference between OTC & exchange trading?
What is the difference between OTC & exchange trading?
Carolina
Tue Jul 09 2024
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5 answers
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Could you elaborate on the key distinctions between Over-the-Counter (OTC) trading and exchange trading in the cryptocurrency and finance world? As a professional in this field, I'm curious to understand how the two differ in terms of transaction execution, liquidity, counterparty risk, and regulatory oversight. Does OTC trading involve more personalized negotiations, while exchange trading relies on automated matching? Also, how do the pricing mechanisms differ, and how do these differences affect investors and traders?
5 answers
Nicola
Thu Jul 11 2024
The lack of transparency in the OTC market is generally attributed to the private nature of these negotiations, ensuring confidentiality for both buyers and sellers.
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EtherWhale
Thu Jul 11 2024
In an OTC market, a trade between two participants can be executed without the involvement or awareness of other market participants regarding the price at which the transaction was finalized.
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SamsungSpark
Thu Jul 11 2024
This feature sets the OTC market apart from traditional exchanges, where transaction details are often publicly disclosed.
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Eleonora
Wed Jul 10 2024
Additionally, OTC markets are often subject to fewer regulations compared to traditional exchanges, further enhancing their privacy and flexibility.
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CosmicWave
Wed Jul 10 2024
However, this reduced transparency and lighter regulatory oversight also come with a cost: liquidity in the OTC market may be more difficult to obtain compared to centralized exchanges.
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