Voice execution

An over-the-counter (OTC) derivative is a bi-lateral contract. Traditionally OTC derivatives were negotiated and agreed either directly between the two counterparties, or through a broker, using voice execution, which means using either telephone or internet messaging.

By contrast, exchange traded derivatives (ETDs) were, and continue to be, traded only on organised, regulated trading venues. These trading venues are known as futures exchanges.

For general information on OTC derivatives and ETDs, see Practice Notes:

1. •

   OTC and exchange traded derivatives—key features and concepts, and

2. •

   OTC and exchange traded derivatives—documentation

Electronic trading platforms

An electronic trading platform (ETP) is a type of trading venue on which OTC derivatives may be traded and which are not futures exchanges but have similar characteristics:

1. •

   they may be regulated, for example as multilateral trading facilities (MTFs) or organised trading facilities (OTFs)—see Practice Note: MiFID II—UK trading venues.

2. •

   they enable multiple parties to make simultaneous bids and offers

3. •

   prices are made available in real time to participants, and

4. •

   contracts