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Glite Dictionary
OTC security

OTC security

7.7
A stock or bond traded outside a stock exchange
  • noun
  • /oʊ ti siː sɪˈkjʊrɪti/
  • Specialized
translation icon : valor OTC
  • Investors should be aware that an OTC security may be less liquid than exchange-traded stocks.

Examples

  • Many OTC securities are less regulated than those on formal exchanges.

  • Many small companies raise capital by offering an OTC security to the public.

  • The company opted to list its OTC security instead of applying for a major exchange.

  • Investors often prefer OTC securities for their potential high returns.

  • Investors should be aware that an OTC security may be less liquid than exchange-traded stocks.

  • Many small companies raise capital by offering an OTC security to the public.

  • The company opted to list its OTC security instead of applying for a major exchange.

Synonyms

over the counter security
vsOTC security
  • Specialized
6.7

An investment like a stock or bond traded directly through dealers, not on a stock market

is defined as trading outside a formal exchange rather than on one
unlisted security
vsOTC security
  • Specialized
8.1

An investment not listed on a stock market that is sold privately or over the counter

focuses on being traded outside a formal exchange rather than on listing status

Antonyms

listed security
  • Specialized
6.0

A stock or bond officially allowed to trade on a stock exchange

Surface Forms

OTC security singular
OTC securities plural

Morphology

OTC + security

The meaning is directly compositional: 'OTC' (over-the-counter / off-exchange trading) specifies the market type and 'security' names the tradable asset, so together they denote a security traded off-exchange. Although 'OTC' is technical jargon, a learner who knows that constituent will readily derive the MWE meaning from the parts.

Etymology

The term OTC security comes from the phrase 'over the counter' and paints a picture of buying something at a small market stall or shop counter instead of in a big store. So an OTC security is a stock or bond traded directly between people and not on a big exchange, which is why it can have fewer rules and be 'harder to sell'.