what is an over the counter derivative 
an over the counter derivative is any derivative security traded in the otc marketplace a derivative is a financial security whose value is determined by an underlying asset such as a stock or a commodity an owner of a derivative does not own the underlying asset in derivatives such as commodity futures it is possible to take delivery of the physical asset after the derivative contract expires the bottom linethe over the counter otc market helps investors trade securities via a broker dealer network instead of on a centralized exchange like the new york stock exchange although otc networks are not formal exchanges they still have eligibility requirements determined by the sec 