What is a key characteristic of the over-the-counter market?

The over-the-counter (OTC) market is characterized by its decentralized structure where trading is conducted between brokers and dealers through various communication methods, including electronic platforms. One of the principal features of the OTC market is that it allows for trading of a wide range of financial instruments, not limited to stocks and includes corporate bonds, derivatives, and other securities.

The statement regarding the linking of OTC brokers and dealers by NASDAQ highlights the important role that electronic networks play in facilitating trades in this market. NASDAQ itself began as an electronic quotation system for OTC stocks, demonstrating how technology connects market participants efficiently. This interconnectivity through NASDAQ increases transparency and provides vital information to traders and investors regarding pricing and availability of securities.

While it may be true that some OTC transactions can occur via phone, saying that it operates solely through phone transactions overlooks the impact of electronic trading systems, which are now prevalent. Therefore, recognizing the role of NASDAQ as a technological facilitator is pivotal in understanding how the OTC market functions today, making the choice that highlights the connection through NASDAQ the most accurate representation of the market's characteristics.