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<\/p>Most stocks are traded on major exchanges like the Toronto Stock Exchange, the New York Stock Exchange and the Nasdaq. But some stocks aren\u2019t listed on exchanges and are instead traded \u201cover the counter\u201d (OTC).<\/p>
So, what are OTC stocks, how can they be traded, and what benefits and risks do they have for investors? Keep reading to find out.<\/p>
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OTC stocks don\u2019t trade on centralized exchanges like the NYSE and TSX. Instead, these stocks trade through networks of dealers or brokers, with trading handled directly between the buyer and the seller.<\/p>
There are a few different reasons why stocks trade over-the-counter. In some cases, it\u2019s because they\u2019re new companies and still relatively small. If they don\u2019t meet the requirements to be listed on a major exchange\u2014such as minimum market cap or share price requirements\u2014they trade OTC instead.<\/p>
Other stocks are listed on OTC markets because companies have been delisted from major exchanges or because it\u2019s a cost-effective option that allows them to avoid the expensive reporting requirements of major exchanges.<\/p>
You can also find a host of major foreign companies listed on OTC markets in the USA. Trading OTC allows these big international companies to access US investment money while avoiding the cost and strict regulatory requirements of listing on major US exchanges.<\/p>
Yes, several brokerage firms let Canadians trade OTC stocks. However, not all trading platforms provide access to OTC markets, so you\u2019ll need to research available markets when choosing a broker.<\/p>
Check out the comparison table below for a rundown of the platforms that offer OTC stock trading in Canada.<\/p>