An over-the-counter (OTC) trade involves the buying and selling of equities off-exchange, as opposed to a listed stock option on a national securities exchange (such as the New York Mercantile Exchange). The OTC option is conducted between a buyer and a seller, sometimes without standardized prices and expiration dates.
OTC brokers help coal producers and buyers (such as utilities) work together to limit exposure to price volatility. Since 1999 standardized domestic coal products have been traded in the OTC market. These markets involve OTC trades for physical coal contracts (those involving coal available for purchase and delivery at the time the contract is signed) or a futures contract (contracts calling for the delivery of a specified quantity of coal at a specified date in the future).
OTC traders work with both domestic and international coal producers. In the last decade global OTC coal trading markets have evolved, with products from South Africa, Australia, China, Russia, Indonesia, Poland, Colombia and Venezuela. OTC trading of international coal products has become more important because these nations produce a steadily increasing share of total coal production. Today more than 40% of the world’s coal comes from outside the United States.
For a list of OTC brokers click here.