Over-the-Counter (OTC) Markets in Australia: 2025 Guide

When most Australians think about investing, their minds jump straight to the ASX or other major exchanges. But there’s a parallel universe in the financial world: the over-the-counter (OTC) market. In 2025, the OTC market is more accessible and diverse than ever—offering unique opportunities, but also some important caveats for investors and businesses alike.

What Is the Over-the-Counter (OTC) Market?

The OTC market refers to the trading of financial instruments—like shares, bonds, derivatives, and even some cryptocurrencies—directly between two parties, outside of formal exchanges. Instead of being matched by a central exchange, trades are facilitated through broker-dealer networks or electronic platforms. This opens the door to assets that may be too niche, illiquid, or unlisted for the main exchanges.

• Examples: Unlisted company shares, government and corporate bonds, foreign currencies, and exotic derivatives.
• Key players: Large institutional investors, brokers, sophisticated retail investors, and companies seeking capital outside traditional routes.

How OTC Markets Operate in Australia in 2025

Australian OTC markets have evolved rapidly in recent years, thanks to improved electronic trading platforms and clearer regulatory oversight. The Australian Securities and Investments Commission (ASIC) continues to tighten rules around transparency and investor protection in OTC derivatives and FX trading, responding to both global and local market events.

• Electronic platforms: In 2025, platforms such as IRESS and Bloomberg Australia dominate OTC trading, with increased use of blockchain for settlement and verification.
• Regulatory updates: ASIC’s 2025 update to the OTC Derivative Transaction Rules now requires real-time reporting of trades over a certain size, reducing the risk of market abuse and improving transparency.
• Popular OTC products: Foreign exchange (FX), contracts for difference (CFDs), unlisted managed funds, and some green bonds (used for environmental projects) are heavily traded OTC in Australia.

For example, a small mining company in Western Australia might raise capital by issuing bonds directly to institutional investors via an OTC platform, rather than undergoing the cost and scrutiny of an ASX listing.

Benefits and Risks for Australian Investors

The OTC market’s flexibility is its greatest strength—and its biggest risk. For sophisticated investors, OTC products offer the chance to diversify portfolios, access early-stage ventures, or trade tailored derivatives that simply aren’t available on exchanges.

• Pros: Wider asset choices, bespoke deals, and sometimes better pricing for large or complex transactions.
• Cons: Lower liquidity, higher counterparty risk, less regulatory protection, and the potential for opaque pricing.

In 2025, ASIC has warned retail investors about high-risk OTC derivative products like binary options and certain CFDs, especially those promoted via social media. Recent enforcement actions have targeted providers making misleading claims or failing to properly assess client suitability.

Who Should Use the OTC Market?

While OTC markets aren’t just for the big end of town anymore, ASIC’s 2025 rules now require brokers to conduct stricter suitability checks for retail clients. This means everyday investors need to prove their understanding of OTC products before accessing them. For businesses and sophisticated investors, OTC markets remain a vital avenue for funding and risk management—think tailored hedging solutions for exporters or direct bond issues for infrastructure projects.

2025 Trends and What to Watch

• ESG and green finance: The OTC market is a hotbed for innovative green bonds and sustainability-linked derivatives in 2025, as both investors and regulators push for climate-aligned finance.
• Crypto OTC: With tighter crypto exchange regulation, Australian crypto investors are increasingly turning to regulated OTC desks for large transactions.
• Tech upgrades: Expect further automation, AI-driven risk management, and blockchain-based settlement to reshape OTC trading over the next year.