Types of Stock Markets

1. Organised Exchange and Over the Counter (OTC) market
This is where the buying and selling of securities is done but buyers and sellers are not present but only the agents (brokers) internet. This system is called “open outcry”.

2. Over the Counter Market (OTC)
Provides an opportunity for unlisted/unquoted firms to sell their security. OTC is usually organized by the dealers or stock brokers who buy securities themselves and then sell them. They maintain a reasonable balance between demand and supply and observe price movements to determine profit margins on sale. Trading may be done through telephones, computer networks, fax etc. The dealers/participants set the trading rules. OTC specializes in securities such as corporate bonds, equity securities, Treasury bonds etc. OTC is underdeveloped in Kenya.

Features of OTC Markets
1. Prices are relatively low
2. Usually deal with new securities of firms
3. Is composed of small and closely held firms.

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