Over-the-Counter Trading (OTC)

Over-the-counter trading (OTC trading) describes the off-exchange trading of energy. Two parties conclude their contracts directly with each other, without using an energy exchange.

Distinction from exchange trading

In contrast to exchange trading, where standardised products are traded via trading platforms, OTC trading enables individual agreements. Contract terms, volumes and prices can be set flexibly between the parties.

Role in energy trading

OTC trading is an important component of energy trading. Companies use it to secure electricity supplies over the long term or to implement individual procurement strategies.

Significance for businesses and energy systems

For industrial electricity consumers, OTC trading offers the opportunity to reduce price risks and to use them independently of timing.

While short-term trading strategies tend to take place in intraday trading, OTC trading offers additional options for long-term and individual agreements.

Frequently Asked Questions (FAQs)

What is over-the-counter trading (OTC trading)?

OTC trading refers to the direct off-exchange trading of energy between two parties without using an energy exchange.

How does OTC trading differ from exchange trading?

In OTC trading, contracts are concluded directly between two parties, whereas exchange trading takes place via standardised trading platforms.

Why do companies use OTC trading in the energy market?

Companies use OTC trading to agree on individual contract terms and to hedge electricity prices over the long term or flexibly.

What role do energy storage systems play in OTC trading?

Energy storage systems enable companies to respond flexibly to supply contracts, store electricity temporarily and better manage consumption and procurement.

Is OTC trading part of energy trading?

Yes. OTC trading is a component of energy trading and complements exchange trading through bilateral contract models.