The biggest difference between over-the-counter trading and on-exchange trading in the currency circle

The main difference between on-exchange trading and over-the-counter trading in currency circle trading is: Trading platform: On-exchange trading is conducted on the exchange, and OTC trading is conducted outside the exchange. Trading method: On-exchange transactions are matched through exchanges, and over-the-counter transactions are directly negotiated between buyers and sellers. Liquidity: On-exchange trading has high liquidity, and OTC trading has low liquidity. Transaction costs: On-site transaction costs are low, but over-the-counter transaction costs are high. Security: On-site trading has high security, while OTC trading has low security.

The difference between on-exchange trading and over-the-counter trading

In currency trading, on-exchange trading and over-the-counter trading are two different trading modes. The main differences are:

1. Trading platform

• On-exchange trading: Conducted on the exchange, with the exchange acting as the matchmaker.
• OTC trading: Conducted outside the exchange, where buyers and sellers directly negotiate trading conditions.

2. Trading method

• On-exchange trading: Conducted through the exchange’s matching engine, buyers and sellers are anonymous and trade according to the prescribed trading rules.
• OTC transactions: Buyers and sellers conduct transactions through direct contact, and transaction conditions are negotiated by both parties themselves.

3. Liquidity

• Exchange trading: Usually liquidity is higher because there are a large number of buyers and sellers trading on the exchange.
• OTC: Low liquidity because buyers and sellers need to find their own counterparties.

4. Transaction costs

• On-exchange trading: Usually transaction costs are low, including transaction fees, network fees, etc.
• OTC: Transaction costs may be higher. In addition to transaction fees, remittance fees, intermediary fees, etc. may also be involved.

5. Security

• On-exchange trading: Trading security is relatively high because exchanges usually have strict security measures such as fund custody and identity verification.
• OTC: Transaction security is low because buyers and sellers are in direct contact and there is no third-party supervision.

Other differences

• Information transparency: On-site trading information is open and transparent, and both buyers and sellers can see real-time market data. OTC trading information is not transparent, and buyers and sellers need to understand market information on their own.
• Regulation: On-exchange trading is regulated by the exchange, while OTC trading is not regulated.
• Transaction speed: On-exchange transactions are faster and OTC transactions are slower.

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