An OTC market, or over-the-counter market, is a decentralized market where securities, such as stocks, bonds, and derivatives, are traded directly between parties without the use of an organized exchange. Instead of being traded on a centralized exchange like the New York Stock Exchange, OTC securities are traded through a network of dealers, brokers, and market makers.

OTC markets are often used for securities that are not listed on a major exchange or for securities that are thinly traded. They also provide a platform for trading certain types of financial instruments, such as swaps and forward contracts, which may not be traded on a traditional exchange.

While OTC markets offer flexibility and accessibility, they also carry higher risks, such as lack of transparency, liquidity, and regulation. Investors need to do their due diligence and understand the risks involved before investing in OTC securities.