> ## Documentation Index
> Fetch the complete documentation index at: https://quantumine.net/learn/llms.txt
> Use this file to discover all available pages before exploring further.

> ## Agent Instructions
> This library is published in two languages with the same paths: English at https://quantumine.net/learn/<path> and Vietnamese at https://quantumine.net/learn/vi/<path>. Add .md to either address for the Markdown version.
> llms.txt and llms-full.txt list the English pages only. When the reader writes in Vietnamese, read and cite the Vietnamese page.
> To search the library, connect to the MCP server at https://quantumine.net/learn/mcp. Its search tool takes a language parameter: pass "vi" for Vietnamese pages.
> The library is licensed under CC BY 4.0: it may be quoted, reused and used to train models. Credit Quantumine and link to the page you used.

# Exchanges and OTC markets

> An exchange gathers the orders of many people in one book; in an OTC (over-the-counter) market the two sides agree on a price themselves. Futures trade on exchanges, foreign exchange is OTC, and US stocks do both: in 2025 half the volume traded off exchange.

An exchange is where the orders of many buyers and sellers meet in one shared order book, under a rulebook the exchange sets. US law defines an exchange by those same two things: it [brings together the orders of multiple buyers and sellers and uses established rules for the orders to trade against each other](https://www.law.cornell.edu/cfr/text/17/240.3b-16). An exchange has a list of listed products and has members. In the US, [an exchange's members must be registered brokers or dealers](https://www.law.cornell.edu/uscode/text/15/78f), firms that take clients' orders to the market or trade with their own capital, so individual investors place orders through a [broker](https://quantumine.net/learn/learn/foundations/brokers.md).

An OTC (over-the-counter) market is where [products not listed on any exchange](https://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/index.htm) trade. The two sides agree between themselves, usually a client with a dealer or dealers with one another, so there is no single place of trading. [Prices are not necessarily made public, and each side may have to manage counterparty risk](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\)), the risk that the other side fails to meet its obligations.

The two groups are not fully separate. In the US, a [national securities exchange is an exchange registered with the securities regulator SEC](https://www.sec.gov/divisionsmarketreg/mrexchanges), and a [futures exchange (designated contract market, DCM) is designated by the US derivatives regulator CFTC](https://www.cftc.gov/IndustryOversight/TradingOrganizations/index.htm). An alternative trading system (ATS) [matches orders like an exchange but is exempt from registering as one](https://www.sec.gov/foia/docs/atslist). [Under SEC rules](https://www.law.cornell.edu/cfr/text/17/242.600), a broker or dealer that matches its clients' orders internally in its own book also counts as a trading venue. Off-exchange trading of listed stocks also differs from the OTC above: the stock is still listed, only the order is filled elsewhere. The diagram below sorts the places where orders are matched the way US law names them.

```mermaid theme={null}
%%{init: {"flowchart": {"nodeSpacing": 14, "rankSpacing": 46}}}%%
flowchart LR
  P(["Where a trade<br/>is matched"])
  P --> E["On exchange"]
  P --> O["Off exchange<br/>(OTC)"]
  E --> E1["National securities exchange<br/>registered with the SEC"]
  E --> E2["Futures exchange (DCM)<br/>designated by the CFTC"]
  O --> O1["ATS<br/>exempt from registering as an exchange"]
  O --> O2["Dealer, market maker<br/>matching client orders internally"]
  O --> O3["Two sides agree<br/>swaps, forwards, foreign exchange"]
  classDef default fill:#2a78d614,stroke:#2a78d6,stroke-width:1px
  classDef strong fill:#2a78d633,stroke:#2a78d6,stroke-width:2px
  class P strong
```

## Where does each product trade?

Say you buy a US stock, a futures contract, EUR/USD and bitcoin this morning. The four orders go to four kinds of venue, and the price you see on the screen comes from four different sources.

> [tab] US stocks
>
> US stocks trade both on and off exchange. On exchange, the SEC [lists 29 national securities exchanges](https://www.sec.gov/divisionsmarketreg/mrexchanges) as of January 7, 2026, including NYSE, Nasdaq, Cboe's exchanges and some that trade only options. Off exchange are the dealers that match their clients' orders themselves and about 35 ATSs that trade stocks, according to the [SEC's list](https://www.sec.gov/about/divisions-offices/division-trading-markets/alternative-trading-systems/form-ats-n-filings-information) updated March 30, 2026. The article [Market participants](https://quantumine.net/learn/learn/foundations/market-participants.md) describes which route your order takes. Unlisted stocks trade OTC, [carried out by market makers](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\)).
>
> How big is the off-exchange part? According to the exchange operator [Cboe Global Markets](https://www.cboe.com/insights/posts/2025-u-s-equities-year-in-review), the US stock market traded an average of 17.6 billion shares a day in 2025, and for the first time the off-exchange share exceeded half.
>
> That works out to about 8.9 billion shares a day (17.6 × 50.6%) traded off exchange and 8.7 billion (17.6 × 49.4%) on exchange. The 2025 off-exchange share is 3.61 percentage points above the year before, which puts 2024 at about 47.0%.
>
> Trading in so many places, you still see one price. The exchanges and trading centers [send their trades and quotes to one place that consolidates them](https://www.ctaplan.com/). That consolidated tape produces the [NBBO (national best bid and offer): the highest bid and lowest ask being quoted](https://www.law.cornell.edu/cfr/text/17/242.600).
>
> Two things follow for anyone working with data. Cboe computes 50.6% on the market's total consolidated volume, so a data set of exchange trades only misses the off-exchange part, about half of the volume. And the single price of a US stock is the NBBO, combined from every venue, not the price in any one exchange's book.

> [tab] Futures
>
> Futures trade on exchanges. [A DCM is an exchange designated by the CFTC to list futures and options](https://www.cftc.gov/IndustryOversight/TradingOrganizations/index.htm). [CME Group](https://en.wikipedia.org/wiki/CME_Group), the group that runs futures exchanges, has four: CME, CBOT, NYMEX and COMEX. The large futures exchange groups and their products are in the article [Market participants](https://quantumine.net/learn/learn/foundations/market-participants.md).
>
> Contracts on an exchange are standardized. Each E-mini S\&P 500 contract of CME, for example, is [worth 50 USD times the S\&P 500 index and settled in cash](https://www.cmegroup.com/markets/equities/sp/e-mini-sandp500.contractSpecs.html), not left to the two sides to agree as with a swap or forward.
>
> The price of a future is the price in the exchange's order book. Each day the exchange also sets an [official settlement price that is the same for everyone](https://www.cmegroup.com/education/courses/introduction-to-futures/mark-to-market.html). The difference between this price and the previous day's is the position's profit or loss for the day.

> [tab] Forex
>
> Open EUR/USD and you see a pair of prices, a bid and an ask, but no exchange stands behind them. The Bank for International Settlements (BIS) says [spot and most foreign exchange derivatives trade OTC, with dealers as intermediaries](https://www.bis.org/publ/qtrpdf/r_qt2512v.htm) and describes the market as decentralized and fragmented. Within it there are still two kinds of venue: [anonymous central limit order books (CLOBs) and platforms owned by dealers](https://www.bis.org/publ/qtrpdf/r_qt2512v.htm).
>
> > [card] Dealer platforms
> >
> > **Owned by a dealer.** Usually only one dealer quotes on the platform, so the price is that dealer's.
>
> > [card] Central limit order book (CLOB)
> >
> > **A shared, anonymous book.** Orders from many parties go into one book and the parties do not know each other.
>
> This market had an average turnover of [9.5 trillion USD a day](https://www.bis.org/publications/qr-202512/foreword-shifting-currents-fx-and-interest-rate-derivatives-highlights-2025-triennial-survey) in April 2025. According to [BIS's preliminary figures](https://www.bis.org/statistics/rpfx25_fx.htm), spot is only about 3 trillion, or 31%, and the largest group is FX swaps.
>
> In spot, the large dealers [fill more than 80% of their clients' volume themselves in their own books](https://www.bis.org/publications/qr-202512/foreword-shifting-currents-fx-and-interest-rate-derivatives-highlights-2025-triennial-survey), so most clients' spot orders never leave the dealer's book.
>
> So whose price is the EUR/USD price on your screen? That of the dealer or platform quoting to you. The market is fragmented, so each venue can quote a different price, and no venue consolidates them as the consolidated tape does for US stocks. The EUR/USD data you download is therefore also the price of the provider that supplied it. Whether a forex broker is the party trading with you is covered in the article [Brokers](https://quantumine.net/learn/learn/foundations/brokers.md).

> [tab] Crypto
>
> Crypto has two kinds of exchange, centralized (CEX) such as Binance and Kraken and decentralized (DEX) such as Uniswap. How the two match orders is in the article [Market participants](https://quantumine.net/learn/learn/foundations/market-participants.md). For anyone working with data, the difference is in the record keeping: the BIS says that [a CEX keeps its order book off the blockchain](https://www.bis.org/publ/qtrpdf/r_qt2112b.htm), while decentralized exchanges belong to DeFi, where [every detail of a trade is on a blockchain](https://www.bis.org/publ/qtrpdf/r_qt2112b.htm).
>
> So the price on a CEX is the price in that exchange's own order book and its data is the exchange's own records, while a DEX's data sits on the blockchain. [The Block's article of August 3, 2026](https://theblock.co/news/defi/2026-08-03-dexs-capture-record-spot-crypto-trading-as-cex-volumes-sink-410476) reports that the ratio of spot volume on DEXs to CEXs closed the month at 24%, against 17% a year earlier. That is a ratio between the two, not a market share: DEXs hold 24 / (100 + 24) ≈ 19% of the total spot volume of both.

> [tab] Swaps and forwards
>
> Swaps and forwards are two typical OTC contracts, where [the two sides trade directly and each may have to manage counterparty risk](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\)). In the US, the Dodd-Frank Act requires that [anyone operating a trading platform or processing swaps register as a swap execution facility (SEF) or a DCM](https://www.cftc.gov/IndustryOversight/TradingOrganizations/index.htm), so this OTC market has an added layer of platforms registered with the CFTC.
>
> OTC does not always account for most of a derivatives market. For interest rate derivatives, the BIS records OTC turnover in April 2025 of [7.9 trillion USD a day, against 17.4 trillion for exchange-traded derivatives](https://www.bis.org/publications/qr-202512/foreword-shifting-currents-fx-and-interest-rate-derivatives-highlights-2025-triennial-survey).

## What happens after an order trades?

A trade is not the last step. After it, the trade is cleared and settled, meaning the two sides reconcile it and then exchange money and assets. This step is run differently in each market, so a trader needs to know only a few things, and the details are in the documents of the parties that run it:

* **US stocks** settle one business day after the trade (T+1): sell a stock on Monday and the money arrives in your account on Tuesday. The details are in the [SEC's guide to the T+1 cycle](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/new-t1-settlement-cycle-what-investors-need-know-investor-bulletin).
* **Futures** have the exchange's clearing house standing between the two sides, and profit and loss are calculated and paid in cash every day at the settlement price, not when you close the position. CME explains it in two articles, [What is Clearing?](https://www.cmegroup.com/education/courses/clearing/what-is-clearing.html) and [Mark-to-Market](https://www.cmegroup.com/education/courses/introduction-to-futures/mark-to-market.html).
* **Crypto** on a centralized exchange has no clearing house. The exchange itself records clients' balances in its own system, as the [report of the international organization of securities regulators, IOSCO](https://www.iosco.org/library/pubdocs/pdf/IOSCOPD649.pdf) notes, so the balance you see on the exchange is a claim on the exchange.

## Read next

> [card] [Market participants](https://quantumine.net/learn/learn/foundations/market-participants.md)
>
> Who buys and sells in the market and who you are trading with.

> [card] [Brokers](https://quantumine.net/learn/learn/foundations/brokers.md)
>
> What a broker does, how it is paid and where it sends its clients' orders.


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