Otc Vs Stock Exchange Market

1. Differences between the OTC and the Stock exchanged market

Both stock exchange and Over the Counter market (OTC) are types of financial institutions which connect borrowers and lenders of funds, and each of them have their own characteristic.In this part, we will discuss some basic differences between two types.

Stock market OTC market

Has detailed rules and regulations in

order to be enlisted Rules and regulations to trade are quite lax

Has a physical location or venue Has no physical location

Highly regulated-> less risky Less regulated-> riskier

Cost of transactions is high Cost of transaction is low

Mostly for large corporations that have stable credit rating Mostly for small corporations that are less organized

• Unlike stock exchanged market with detailed rules and regulations in order to be enlisted, OTC market is for unlisted companies, so it is easier for a company to sell their securities on OTC market with less rigid rules. According to statistics collected in April 2010, there were 277 listed companies in HoSE and 225 ones on HNX trading floor when there were 1,750 companies trading stocks in this market with more than 219,000 investors(Ch? kô tìm dc ref c?a cái này,s? li?u ch? l?y c?a b?n ch?).

• The OTC market is a decentralized market of securities not listed on an exchange where market participant trade over telephone or electronic network