Over-the-counter (OTC) stocks are shares of companies that are not listed on a major stock exchange, such as the New York Stock Exchange or the NASDAQ. OTC stocks are typically traded through a broker-dealer network, rather than on a centralized exchange. This can make them more difficult to buy and sell than exchange-listed stocks, but it can also offer some advantages, such as lower trading costs and greater flexibility.
There are a number of reasons why a company might choose to trade OTC rather than on an exchange. Some companies are too small to meet the listing requirements of an exchange. Others may be privately held and not want to disclose their financial information to the public. And still others may simply prefer the flexibility and lower costs of trading OTC.
