Difference Between ASX CFDs and OTC
If you're interested in Contract for Difference (CFD) trading instrument, then the difference between ASX CFDs and OTC can not be overemphasised.
CFDs are available and listed on the Australian Securities and Exchange or ASX and over-the-counter or OTC. Both the ASX and OTC CFDs are contracts for difference, but there is a difference between ASX CFDs and OTC in the trading of the instruments.
Difference between ASX CFDs and OTC
The major difference between ASX CFDs and OTC is that on OTC, the contract is drawn between you and provider, whereas in ASX, the CFDs are traded on a regulated public exchange.
Another difference between ASX CFDs and OTC is that on ASX, the investor can "trade with anyone" and everything is transparent, unlike in OTC where you trade with and against the provider and you get the price that the provider sets. Another difference between ASX CFDs and OTC is that on ASX, the exchange becomes the buyer to every seller and the seller to every buyer.
The difference between ASX CFDs and OTC doesn't end in the way the instrument is traded. The difference between ASX CFDs and OTC also lies in the protection of the investors. Since ASX is regulated, the exchange itself is the provider but not the broker. The ASX can also function as a clearing house that ensures the market's creditworthiness.
