What are “OTC derivatives\?
A derivative contract which is privately negotiated is called an OTC derivative. OTC trades have no anonymity, and they generally do not go through a clearing corporation. Every derivative product can either trade OTC (i.e., through private negotiation), or on an exchange. In one specific case, the jargon demarcates this clearly: OTC futures contracts are called “forwards” (or, exchange-traded forwards are called “futures”). In other cases, there is no such distinguishing notation. There are “exchange-traded options” as opposed to “OTC options”; but they are both called options.
