The "over-the-counter" market received its name years ago because brokerage firms would hold inventories of stocks and then sell them by literally passing them over the counter to the buyer.

Question

Quizplus · Accepted Answer

This statement is true. The term "over-the-counter" (OTC) refers to any trades that occur off of a formal exchange, such as the New York Stock Exchange (NYSE). OTC trades are often facilitated by brokers and dealers who hold inventories of securities and offer them for sale directly to customers, rather than through an exchange auction. In the early days of securities trading, brokers would often conduct OTC transactions by physically passing securities "over the counter" to their buyers. Nowadays, most OTC trades are executed electronically, without any physical exchange of securities.

The "Over-The-Counter" Market Received Its Name Years Ago Because Brokerage