Q. With reference to the components of the Secondary Market, consider the following statements:
1.The Over-The-Counter (OTC) Market involves direct trading between two parties without the use of a centralized exchange.
2.The Stock Exchange Market is a decentralized platform where securities are traded informally between investors.
3.OTC Markets are generally subject to less regulatory oversight compared to stock exchanges.
Which of the statements given above is/are correct?
Quarterly-SFG-Jan-to-March
Red Book

[A] 1 and 2 only

[B] 1 and 3 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Explanation:

  • The OTC Market is decentralized and involves direct trading between two parties without the involvement of a formal exchange platform.
  • The Stock Exchange Market is a centralized and formal marketplace where securities are traded under regulated conditions, not an informal or decentralized setting.
  • OTC markets are typically less regulated and more flexible compared to stock exchanges, which are governed by stringent compliance and disclosure norms.

Source- 11th NCERT: Economics: Indian Economic Development and TMH Indian Economy by Ramesh Singh

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