OTC. A market, conducted mainly over the telephone, for securities made up of dealers who may or may not be members of a securities exchange. Thousands of companies have insufficient shares outstanding, stockholders, or earnings to warrant listing on a national exchange. Securities of these companies are therefore traded in the over-the-counter market between dealers who act either as agents for their customers or as principals. The over-the-counter market is the principal market for U.S. government and municipal bonds and for stocks of banks and insurance companies. (2) A market for options traded directly between buyer and seller, unlike a listed stock option. These options have no secondary market and no standardization of striking prices and expiration dates. See Listed Stock Option; Secondary Market.