OTC

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Over-the-counter. As opposed to on exchange, or regulated market, or MTF. It’s a quaint old notion that you could pop into your local branch of your investment bank and acquire a derivative contract from a teller, but there it is.

“OTC” really means a private, bilateral contract, on bespoke terms, in contrast to one that is standardised, public and traded on exchange.

Examples of OTC contracts

• Swaps traded under an ISDA Master Agreement (as long as they are not cleared derivatives)
• Securities lending and repo transactions

See also

• EMIR - which has been a right royal pain in the posterior to those legions of ISDA negotiators who quite liked the status quo - but which addresses such topics as
• Central counterparty clearing of OTC derivatives (so called “OTC to CCP”)
• Compulsory margining of OTC derivatives that aren’t centrally cleared
• Portfolio reconciliation and dispute resolution of OTC derivatives

Conduct of Business

This is an article about the FCA’s conduct of business rules, known by its chapter in the FCA Sourcebook, COBS, which implement, among other things, MiFID (directive 2004/39/EC (EUR Lex) and implementing directive 2006/73/EC (EUR Lex)).