An Institutional OTC desk arranges trades outside a public central order book, often for companies and larger clients. OTC stands for Over the Counter. A quote may come from a direct counterparty or through an intermediary; the name alone does not determine the contract, custody or settlement safeguards.
For an ordinary exchange purchase, Petr sees public bids and offers in an order book. With OTC, he instead negotiates a specific trade. Kraken describes execution outside its open exchange; Coinbase Prime offers RFQ, Request for Quote, asking a liquidity provider for a price. The trade then takes place outside the central book. This does not tell him how subsequent transfers work: account balances may change first, while sending bitcoin over the network is another step. [1] [3]
A single brand can cover different services and companies. Petr therefore identifies the contracting entity, the legal person with whom he makes the agreement. A Principal trades as the direct counterparty; an agent arranges execution for the client. The CB Lux policy also describes matched principal: the provider enters the trade and links it to a corresponding trade elsewhere. That is different from simply passing on an order. The distinction helps establish who must deliver what and against whom the client has a claim. This policy applies to the specified company, not automatically to every service using the same brand. [2]
Petr requests a price, but has not bought anything yet. With Coinbase Prime RFQ, he receives a quote with a short acceptance window; without timely acceptance it expires. Before confirming, he checks the buy direction, currency and full requested quantity. The market can move while he waits, making the next quote different. An old screenshot is therefore neither proof of a trade nor permission to buy later at that price. Accepted terms and the subsequent execution confirmation are what matter. [3]
In our model, Petr is offered 10 BTC at 60,020 USD per bitcoin, giving a total of 600,200 USD. Against a contemporaneous comparison price of 60,000 USD per bitcoin, the difference for the whole trade is 200 USD. This is our own illustration, not a live quote or an assessment of a particular firm. If the agreed price already includes trading fees, do not add them again. That does not erase the difference from the comparison price. Transfers or financing may also be included to a different extent; read “all-inclusive” alongside its terms. [1] [3]
After trade confirmation, Petr wants to know what he has actually received. Settlement means delivering the agreed money and assets. Kraken describes automated RFQ settlement as debiting the required balance and crediting the purchased currency to the account. It also offers agreed later settlement for eligible clients. The former needs the available balance; the latter also depends on the agreed delivery deadline. A trade confirmation alone is therefore not enough: Petr compares it with the actual movements on both sides. [1]
Reverse the example: a seller has already delivered 10 BTC but has not yet received the agreed 600,200 USD. The seller has a claim for payment, not automatically a final loss of the whole amount. They are nevertheless exposed to whether the other party pays as agreed. The label OTC does not ensure that both deliveries occur as one inseparable simultaneous step. That linkage is called atomic settlement and requires a specific mechanism. Prefunding or agreeing a delay does not by itself remove counterparty risk. [1] [2]
Petr need not display his order to the whole public book, but the provider may know his identity and keep records. Kraken requires client verification and matching account names for bank funding. Discretion therefore does not promise trading without identification. Nor does the absence of a public order establish zero market impact. The counterparty may subsequently trade to replenish inventory or balance risk. The way the deal was arranged does not reveal what further trades may follow. [1] [2]
Petr finally checks whether he is buying actual BTC in a spot trade, meaning the asset itself, or a derivative, a contract linked to its value. He checks quantity, counterparty, costs and what the other side should receive. USD and USDC are not the same contractual unit: a dollar payment and a transfer of a token tracking the dollar have different conditions. Even a BTC account credit is not yet a withdrawal to his own wallet. Product, custody and withdrawal are separate questions; service availability can also vary with the client’s country. [1] [2] [3]
For the clearest picture, read this entry together with Market maker, Settlement risk, Counterparty risk, Limit order. The reverse links also lead from Prime brokerage.