OTC is a direct off exchange transaction that is facilitated by crypto broker such as Mobee to trade between fiat and crypto assets, which are beneficial because of:
1. Avoid slippage and access liquidity at a better price
2. Minimize hacking risks with traditional cryptocurrency exchanges
3. Faster settlement of large trades and quick access to funds
Here in this article, we're going to explain each of the benefits.
OTC Desks conduct OTC trades with clients. Instead of matching buyers with sellers, an OTC desk acts as a dealer for anyone looking to trade an asset. These desks are generally used when a trade is not otherwise possible on crypto exchanges. This may be because the asset doesn’t trade on the exchange or if an order is large enough to limit market impact and slippage (the difference between the expected and actual executed price of a trade). To minimize the risk, OTC desks may provide a “lock-in price” for a specified period of time.
Each OTC Desk has its own aggregated order book that connects multiple liquidity providers to trade large amounts of assets without moving the markets. OTC Desks potentially save clients money by providing a better price than the blended average available in other exchanges’ order books.
Imagine you're planning to buy USDT using 10B worth of IDR. You can deposit your funds via local exchanges that supports IDR and swap it with USDT. By doing this, you're exposing yourself with the risk of the exchange that you're depositing got hacked. There are multiple hacks that already happened to exchanges before such as Bitfinex, Mt. Gox, FTX and more. Exchanges are publicly hosted, meaning that it'll always be a hacker target as it can be publicly accessed.
Meanwhile, OTC desks are private. When you're trading via OTC desk, you can move your funds directly to the broker's bank accounts and receiving your crypto directly on your preferred wallet. Thus, dramatically reducing the hacking exposure that you might otherwise face when depositing big amount on exchanges.
Moving 10B worth of IDR from your bank account to exchanges? That is sure is going to trigger lots of banks alert and your funds might not arrive as soon as you think. Thus risking yourself to be exposed to drastic price movements (which is rather common in crypto), so by the time your funds arrived in the exchange the price might not be as favorable anymore.
With OTC desk, we can create an invoice according to the amount that you want to trade. This way, the banks would factor this more into payment and not investments, thus speeding up the processes especially for bigger amounts. Thus increasing the speed of the funds movement and able to close the trade according to the agreed lock-in price.
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