The OTC derivative market is significant in some asset classes: interest rate, foreign exchange, stocks, and commodities.
[2] Although the notional amount outstanding of OTC derivatives in late 2012 had declined 3.3% over the previous year, the volume of cleared transactions at the end of 2012 totalled US$346.4 trillion.
[4] The Bank for International Settlements statistics on OTC derivatives markets showed that "notional amounts outstanding totalled $693 trillion at the end of June 2013...
Stocks quoted on the OTCBB must comply with certain limited U.S. Securities and Exchange Commission (SEC) reporting requirements.
[6] Some companies, with Wal-Mart as one of the largest,[7] began trading as OTC stocks and eventually upgraded to a listing on fully regulated market.
In 1972, with stores in five states, including Arkansas, Kansas, Louisiana, Oklahoma and Missouri, Wal-Mart began trading as over-the-counter (OTC) stocks.
[7] In Kiplinger in 2017, Dan Burrows wrote that American OTC markets are rife with penny stock fraud and other risks, and should generally be avoided by investors "with the exception of large, established foreign firms".
[8] An over-the-counter is a bilateral contract in which two parties (or their brokers or bankers as intermediaries) agree on how a particular trade or agreement is to be settled in the future.
[14] In their 2000 paper by Schinasi et al. published by the International Monetary Fund in 2001, the authors observed that the increase in OTC derivatives transactions would have been impossible "without the dramatic advances in information and computer technologies" that occurred from 1980 to 2000.
These institutions manage portfolios of derivatives involving tens of thousands of positions and aggregate global turnover over $1 trillion.
In 2000 the authors acknowledged that the growth in OTC transactions "in many ways made possible, the modernization of commercial and investment banking and the globalization of finance".