What is OTC trading?
OTC stands for Over-the-Counter, in a literal translation — bypassing the counter. This term refers to OTC trading carried out directly between clients and market makers. In this case, the seller and buyer bargain directly with each other, usually with the assistance of third parties. Long time OTC trading has been an important instrument in traditional financial market, but in 2018, has found wide application in the field of cryptocurrency.
Why market participants choose OTC trading?
Market participants can abandon the traditional exchanges in favor of OTC for a number of reasons, including price stability, speed of execution, security and privacy.
Than OTC trading differs from trading on the stock exchange?
In the course of trading on the exchange for a large transaction, you usually need to make many small transactions, with the rate in each can vary. Liquidity and volatility at that time determine the number of required transfers, and the spread of courses. Fluctuations in prices normally observed in the cryptocurrency market, can significantly increase costs while trading and hurt market participants.
In the course of OTC trading, customers are limited to one large transaction that allows you to increase efficiency and avoid difficulties with the execution in different markets. In addition, the transaction is not recorded in the book of orders of the courts and is not displayed publicly, allowing you to achieve a higher level of privacy.
What OTC trading is takesall?
A significant portion of cryptocurrency funds were collected through a token-campaigns running in 2017 and early 2018. For example, the Element Group has helped its clients raise more than $500 million Clients OTC trading, The Element Group provides services of professional and innovative management of risks, and proposes solutions for liquidity and capital. For companies who are at the stage of post-ICO, active management of collected funds is a key difficulty, and OTC trading can offer sophisticated customized solutions.
As the demand for OTC changes over time?
In the world of cryptocurrency OTC-trading for a long time remained the prerogative of the big players and “whales”, but a number of factors have influenced the recent growth of interest and wider adoption of OTC in the industry. Mainstream cryptocurrency exchanges currently known for their huge lists of unverified users, so the services OTC trading are beginning to occupy the niche of the “average” market participants with orders of $100 thousand and above. This is especially important against the background of the difficulty of depositing and withdrawing Fiat funds from the exchange accounts and a constantly changing regulatory frameworks. After the regulatory field will be more specific, the major players will need tools with the attributes of liquidity and risk management of the OTC market.
What is the impact of regulation on OTC trading?
As the cryptocurrency faced with regulation, safety recommendations and other tests, they will be more prepared for competition in the traditional investment. The growth of demand at the institutional level requires a deeper and more permanent liquidity. Often cryptocurrency exchanges can’t meet these liquidity requirements, which gives additional impetus to the expansion of the market for OTC trading.
How to choose a provider of OTC trading?
OTC firms provide solutions to problems of liquidity, pricing and information. This focus on providing a single price or decisions and individual work with each customer to create a customer-centric environment, which allows to expand the service in new directions: from escrow to lending and syndication.
The best OTC companies adapt to the emerging and uncertain markets, balancing confidence and humility, and offer its customers consistently competitive services and liquidity.
A key factor when comparing providers should be their ability to carry out transactions in high growth markets, defined by high volatility, illiquidity and algorithmic trading skill.