Benefits of OTC Trading vs. Exchanges

OTC trading and exchange trading are the two primary mechanisms by which assets, including cryptocurrencies, are bought and sold. While both have their merits, OTC trading presents several distinct advantages:

1. Larger Volume: OTC desks often handle large-volume trades, which might be difficult to execute on regular exchanges without affecting the asset’s price.
2. Price Stability: Trading large volumes on exchanges can lead to slippage — a change in the price of an asset due to trade size. OTC trades can minimize this risk as the price is often pre-negotiated.
3. Efficiency: OTC desks can offer faster settlement times compared to some exchanges, especially when dealing with significant trade volumes.
4. Confidentiality: OTC trades offer more privacy. The specifics of the trade, such as the parties involved and the exact trade volume, aren’t made public.
5. Flexibility: OTC desks can offer more flexible trading hours compared to traditional exchanges, which might have set operational times.