1. Exchange trading
On-Exchange Trading refers to transactions on a stock exchange or other organized market. In floor trading, buyers and sellers directly trade with each other through the trading system of the exchange, and the exchange acts as a matchmaker to ensure the smooth progress of the transaction.
The characteristics of floor trading include:
- The trading location is fixed
- Trading hours are fixed
- Standardization of trading contracts
- bidding transaction
- Very low risk of default
In floor trading, investors can trade stocks, bonds, futures, options and other financial products. Exchanges usually provide trading platforms and related market data, and investors can trade through brokers or directly access the exchange's system.
2. OTC transactions
Over-the-Counter Trading (Over-the-Counter Trading) refers to trading activities in a non-centralized market that does not depend on the matching system of the exchange. In OTC transactions, buyers and sellers transact directly through a broker, trading platform, or other intermediary.
Features of OTC trading include:
- Trading location is not fixed
- Trading hours are not fixed
- matchmaking transaction
- Higher risk of default
In over-the-counter transactions, investors can trade various financial products such as stocks, bonds, foreign exchange, and derivatives. Over-the-counter transactions typically involve institutional investors and high-net-worth individuals who buy and sell through brokers or trading platforms.
3. Compare
Compared with over-the-counter transactions, on-exchange transactions have higher transparency and liquidity, and are subject to stricter supervision. Investors can buy and sell stocks, bonds and other assets through on-site transactions to meet investment goals and needs.
The advantages of over-the-counter trading include greater flexibility and customization, greater privacy, and a wider range of market participants. However, due to the lack of centralized matching and transparency, OTC transactions may face challenges such as insufficient liquidity and unfair prices. Therefore, investors need to comprehensively consider various factors and understand their own needs when choosing a trading method.