![]() This means that there is a greater chance of earning a higher return on any investment or minimising the risk of loss. In comparison with other alternatives, the electronic marketplace allows for rapid processing of orders for the purchase and sale of products and seamless interaction with customers and other representatives.Īn (OTC) market offers this advantage partly because it allows for quick transactions in buying and selling securities. Related: What is a financial market? Definition, types and careers Example of a dealer marketĪ successful example of an (OTC) market is the National Association of Securities Dealers Automated Quotations (NASDAQ), an American stock market that facilitates the electronic trading of securities worldwide. Dealers offer to buy and sell securities at offer and bid prices during the trading period. Instead of a trading floor, market makers operate and use a telecommunications network for connectivity. The result is an increase in liquidity for investors. This type of market requires dealers to meet stringent requirements, including continuous compliance with market regulations, to remain competitive.Īs the dealers offer securities for sale or purchase at the bid or offer price, they qualify as market makers. ![]() Among these financial instruments are securities and commodities, including equities and government bonds. They quote an offer and a bid price to trade specific financial instruments. What is a dealer market?ĭealer markets are electronic trading markets where dealers use their own accounts without the involvement of a third party. In this article, we examine how (OTC) markets work, dealers' primary functions, the importance of these markets and how they differ from other markets. The dealers provide such services in dealer markets, also known as over-the-counter (OTC) markets. ![]() To ensure a transparent transaction between buyers and sellers, it's necessary to moderate supply and demand. Liquidity dominates the financial markets. ![]()
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