What does this Practice Note cover? This Practice Note explains the trading of over-the-counter (OTC) derivatives on electronic trading platforms (ETPs) and covers: • the ways in which OTC derivatives may be traded • the reasons for increased trading of OTC derivatives on ETPs • the types of OTC derivatives that can be traded on ETPs, and • the documentation required for trading OTC derivatives on ETPs What are the different methods of trading OTC derivatives? OTC derivatives may be executed through various mechanisms, including: • voice execution • electronic trading platforms (ETPs), and • hybrid systems Voice execution An OTC derivative is a bi-lateral contract. Traditionally, OTC derivatives were negotiated and agreed either directly between the two counterparties, or through a broker, using voice execution, which means using either telephone or internet messaging. By contrast, exchange traded derivatives (ETDs) were, and continue to be, traded only on organised, regulated trading venues. These trading venues are known as futures exchanges. For general information on OTC derivatives and ETDs, see Practice Notes: • OTC