OTC stocks, also known as over-the-counter stocks, are US instruments that are not listed on major US exchanges such as NASDAQ or the New York Stock Exchange. Instead, they are traded directly between two parties in a decentralised market.
Typically, OTC stocks belong to smaller companies that are unable to meet the listing requirements of traditional exchanges. These companies may choose to avoid paying listing fees or being subject to reporting requirements. Overall, the process of buying or selling OTC stocks is generally similar to that of NASDAQ/NYSE-listed stocks. However, it's worth noting that orders involving OTC stocks may experience slower execution times due to lower liquidity in some cases.
Are OTC stocks allowed in an ISA?
Most OTC stocks we offer meet HMRC's eligibility criteria and are allowed in an ISA. See all ISA-eligible stocks 👉 here.
What happens if a stock is moved from an exchange to OTC?
In most cases, nothing changes. The stock would still stay tradeable.