Over the counter (OTC) is a direct deal that occurs between two parties interested in selling or buying crypto or others without the need of a middle man. Crypto trading exchanges like Ausfinex provide OTC trading services Australia for their users and make the process smooth and secure. These types of trading are operated in a decentralized manner without any middle man. Average retail investors don’t worry about the OTC but it pays to have a basic understanding of how these trades work. why? because of the high-volume of the cryptomarket and institutional investors are trading and moving the fiat currency that sometimes everyday investors find it difficult to read. Some reports suggested these OTC trades have a direct impact on the price fluctuation and increased volume in the cryptomarket.
Benefits of OTC trading desk
Most of the traders think that OTC trading is a high-volume trading platform because these trading desks offer higher liquidity to their users than the liquidity accessible on the fiat exchanges. The other benefit of using these trading desks for buying and selling crypto is that they offer protection against slippage. Slippage is a common term in trading that means the movement in the market, resulting in the increase or decrease of an asset value making the trade unfavorable. OTC desks while conducting a trade fix the agreed-upon price, giving protection to the traders against the slippage and low liquidity.
The next benefit of using OTC trading desks is that there is no central exchange involved, and trades are executed between the buyer and seller directly. Due to this, these trades don’t have a huge impact on the crypto unless high volume trades are executed. The trades are derisked and prices appear less volatile due to the use of multiple liquidity pools.
The next benefit of using these OTC platforms is that they offer greater flexibility to their users that can be traded. With OTC platforms the users can buy digital currencies that are not yet available on the fiat currency exchange. Any high-volume trader looking to invest in a new asset to take early advantage of the OTC trading desk helps them in getting the edge over other traders.
The last important benefits of these OTC trading desks is the settlement. Most OTC platforms settle the trades on the same day which provides traders with immediate liquidity. This liquidity can be used by the traders to buy new assets and execute new trades.
When to opt for OTC trading desks?
OTC crypto desks have limiting features that a user has to trade a minimum asset value. The majority of users of these platforms are hedge funds, big brokerage firms, and high volume day traders as the minimum asset value is somewhere close to $50,000 which is not how common retail or individual traders trade with. OTC platforms are best for complex transactions, unregulated commodities, and reduced fees, when compared to the volume involved thus making them ideal for large and institutional traders.
As these trading desks are not regulated, buyers and sellers are free to do unregulated digital transactions and OTC platforms allow such misdoings. These kinds of issues are common with OTC platforms whenever the fiat currencies are traded via these desks.
