OTC derivative

OTC derivative
over-the-counter (OTC) derivative
USA
A derivative product not traded on any organized, regulated exchange. OTC derivatives are customized, bilateral, privately negotiated contracts, which, as a result, can be illiquid as compared to standardized exchange-traded derivatives. No exchange operates between, and essentially guarantees, the performance of the parties to an OTC derivative as is the case with exchange-traded derivatives. Examples of OTC derivatives include most credit derivatives, including credit default swaps (CDS), interest rate swaps and currency swaps.
See also

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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