Australia’s financial landscape is fast-evolving, and over-the-counter (OTC) trading is firmly in the spotlight in 2025. While the ASX remains the go-to for listed shares, a growing number of investors and companies are turning to OTC markets for flexibility, privacy, and access to a broader range of assets. But as the market matures, so too do the rules, risks, and opportunities. Here’s what Australian investors need to know about OTC trading this year.
What Is Over-the-Counter (OTC) Trading?
OTC trading refers to the buying and selling of financial instruments—like shares, bonds, derivatives, and even cryptocurrencies—directly between two parties, rather than via a centralised exchange. These transactions often take place through broker-dealer networks or electronic trading platforms, rather than the ASX or Chi-X.
- Customisation: OTC deals are often tailored to specific needs, unlike standardised exchange-traded products.
- Privacy: OTC trades aren’t publicly reported in real-time, allowing for greater confidentiality.
- Broader Access: Investors can access unlisted shares, smaller company bonds, and niche derivatives not available on public exchanges.
Popular OTC instruments in Australia include unlisted company shares, corporate bonds, FX contracts, and crypto assets. OTC markets are also a go-to for block trades and bespoke derivatives, particularly for institutional investors and sophisticated individuals.
2025 Regulatory Updates: What’s Changed?
OTC trading operates in a more lightly regulated environment compared to exchanges, but 2025 has brought notable changes:
- ASIC’s Enhanced Oversight: The Australian Securities and Investments Commission (ASIC) ramped up surveillance on OTC derivatives, focusing on transparency and counterparty risk management. New reporting requirements for OTC derivatives, especially those involving retail clients, came into effect in March 2025.
- Crypto OTC Desk Regulation: With the Digital Assets (Market Conduct) Bill 2024 now fully implemented, all OTC crypto desks must hold an Australian Market Licence and comply with new anti-money laundering (AML) protocols.
- Investor Protections: Product intervention powers have been extended, allowing ASIC to restrict certain complex OTC products being marketed to retail investors.
These changes aim to strike a balance between innovation and investor safety. For example, if you’re considering buying unlisted shares in a fintech startup or engaging in OTC crypto swaps, you’ll now encounter stricter disclosure requirements and more robust counterparty checks.
Risks and Opportunities in OTC Trading
OTC markets can be fertile ground for opportunity—but they’re not for the faint-hearted. Here’s a rundown of what to consider in 2025:
- Counterparty Risk: Unlike exchange trading, there’s no central clearinghouse. If the other party defaults, you could be left empty-handed.
- Liquidity: OTC markets can be less liquid, making it harder to buy or sell large positions quickly or at favourable prices.
- Pricing Transparency: Because trades are private, price discovery can be challenging. Savvy investors often use multiple sources to benchmark prices.
- Regulatory Compliance: New rules mean brokers and investors alike need to stay on top of licensing and reporting obligations, especially in areas like crypto and derivatives.
On the flip side, OTC trading can open doors to early-stage investments, private placements, and tailored risk management strategies. For example, many Australian family offices now use OTC FX contracts to hedge against dollar volatility, while startups raise capital through private share placements before a potential ASX listing.
Real-World Examples: OTC in Action
- Startup Equity: In 2025, several high-profile Australian tech startups have raised capital through OTC share sales, allowing sophisticated investors early access ahead of potential IPOs.
- Crypto OTC Desks: Major crypto exchanges in Australia, like Independent Reserve and Swyftx, now operate regulated OTC desks for large digital asset trades, following new licensing rules.
- Corporate Bonds: With higher interest rates, OTC trading in unlisted corporate bonds has surged, giving income-seeking investors more choice beyond the ASX-listed universe.
How to Approach OTC Trading in 2025
- Work with established, licensed OTC brokers or platforms. Ask for credentials and regulatory compliance details.
- Understand the product. If you’re trading derivatives or crypto, know the underlying risks and mechanics.
- Keep records of all OTC transactions for tax and compliance purposes.
- Stay updated with ASIC and AUSTRAC regulations, especially if you’re trading digital assets or derivatives.
OTC markets can be a valuable tool, but only for those prepared to do their homework and manage the unique risks involved.
