There are a few firms, mainly in the City of London, who deal in stocks and shares on an 'over-the-counter' (OTC) basis, i.e. they sell them to individuals and institutions much like consumer goods are sold across shop counters.

But these are shares which, though technically issued by public companies, are for most purposes private, and thus are normally controlled by families or individuals.

And of course they are not traded on the official stock market.

The oldest OTC market is that run by Granville and Co., which is both a licensed dealer in securities and a licensed deposit-taker.

Its market works on the principle of matching buyers and sellers, and it does not itself take a position. Another leading market-maker in OTC stocks is Harvard Securities, which takes the opposite approach and runs its own websites in stocks, which, it argues, makes for an easier marketplace. Any licensed dealer in securities (licensed by the Department of Trade) can sell stocks to the public.

If you wish to buy stocks on this market, be sure you find out in some detail about the company whose shares you buy. One advantage of investing in a new issue of shares on the OTC markets is that the money you put in may qualify for tax relief under the Business Expansion Scheme. This does not apply to stock exchange issues, even on the USM.


CCMG - 2013


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