OTC

OTC, or over-the-counter, is a term used in medicine and finance to describe products or markets that operate without a central, formal exchange. It encompasses a range of meanings, but is most often encountered in two areas: healthcare and financial trading.

In healthcare, over-the-counter drugs are medicines that can be purchased without a prescription. They are regulated to ensure safety and accurate labeling; in the United States, the Food and Drug Administration reviews ingredients, labeling, and dosage recommendations before a product is marketed as OTC. Consumers use these medicines for common ailments such as pain relief, allergies, colds, and sleep. Safety considerations include potential misuse, interactions with other medicines, and restrictions based on age or medical conditions; warnings are printed on the label, and some products may change status as new evidence or safety concerns arise.

In financial markets, OTC refers to trading that occurs directly between two parties rather than on a formal exchange. OTC transactions cover a broad range of instruments, including stocks of smaller or non-listed companies, corporate bonds, and many derivatives. Trading can take place through dealer networks or electronic quotation systems. Because there is often less price transparency and liquidity, prices may be more variable and counterparty risk can be higher than on exchanges. In the United States, broker-dealers and platforms such as the OTC Markets Group provide venues for OTC equities, while other products may be subject to different levels of standardization and regulatory oversight. Regulators such as the SEC and FINRA oversee broker-dealers, with derivatives oversight often falling under the CFTC; international rules vary.

OTC markets thus offer access to products outside formal exchanges but require careful consideration of liquidity, disclosure, and risk.