n NISM Certifications
XV NISM Series XV
Medium

How are Over-The-Counter (OTC) market transactions settled? OTC markets are decentralized platforms where trades occur directly between parties without the use of stock exchanges or clearing corporations, which allows more flexibility but requires direct counterparty negotiation.

Practice question from NISM XV Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Through stock exchanges

  2. Directly between parties

    Correct answer

  3. C

    Through clearing corporations

  4. D

    None of the above

Why this is the answer

OTC transactions are negotiated and settled directly between counterparties, such as banks or traders, without involving exchanges. Examples include currency trades or private bond transactions.

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