What is OTC Order? How it Works in Binance?2 min read

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Binance is a popular exchange in the crypto world. It provides various services for crypto traders. we are going to talk about one of the Binance features named OTC in this article.

OTC stands for over the counter, to explain it we can say its whole another market outside of traditional exchanges that we are familiar with them.

Over-the-counter trading is the trading of crypto directly between two parties. In these markets, there is the middle man that facilitates the deal between large buyers and sellers.  It takes place without the need for an exchange or a public order book.

In the crypto OTC market, both parties can trade crypto-to-crypto or crypto-to-fiat, Also dealers act as market-makers by quoting prices at which they will buy and sell a security, currencies, or other financial assets. Whether crypto-to-crypto or crypto-to-fiat, the need for a desk is imperative. Desks are simply professional platforms that deal with crypto traders directly.

Why would anyone use OTC trading?

If you want to buy a large volume of BTC on one exchange, you probably have to buy it from multiple sellers and slippage may occur. It happens when there are not enough sellers offering your desired price.

Instead of buying the volume at multiple exchanges while paying extra fees, OTC comes in as the best alternative.  The features that are appealing in the OTC market are Privacy and the low impact it has on market prices.

Traders can buy or sell large amounts of crypto quickly and easily. OTC trading provides more privacy for high-volume crypto traders. Binance exchange also has this feature and provides services for its users. and I have to mention that our Binance clone script has the OTC trading features too.

So the advantages are listed below:

OTC order advantages

Improved liquidity

The first reason can be the liquidity for whales because in traditional markets like stocks, for example, there are very few exchanges for an asset so all of the liquidity is concentrated in one place.

Increased anonymity

OTC orders are not visible on public order books

Price

  • It can process large orders without disrupting the market price
  • It can often negotiate a better than market price with a counterparty

Limitations of crypto exchanges

With the help of OTC desks, buyers and sellers are enabled to make direct trades without the need of third parties and without any limitations. This will solve the problem of scam schemes that usually happens under the name of third parties.

This order can be added to the exchange platform that you want to develop.  You can ask the cryptocurrency exchange software development company to embed this feature in your exchange platform. also adding this feature to your platform may affect the cryptocurrency exchange development cost so check out how much it will raise the price.

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