OTC trading is an important tool of the traditional financial market. The traders can refuse to use exchanges in favor of OTC for a number of reasons, including obtaining a fixed known price, the speed of execution of the whole order, processing of large volume, security and confidentiality.
For trading on the exchange to process a large amount it needs, first, to deposit these funds to the exchange (which you need to trust, and which works fast enough and carefully process the account replenishment), or to several exchanges, and secondly to make a lot of small deals, the rate of each may vary, liquidity and volatility of the exchange at that time determine the number of deals required, as well as the spread of rates. Rates fluctuations can significantly increase the costs of trading and harm market traders, as the sale/purchase of a large volume can have a strong impact on the exchange rates.
In the case of OTC trading, customers are focused to one large deal, it allows to increase efficiency, to avoid problems with the execution on different exchanges, to get the best rate and eliminate a lot of possible commissions. In addition, transactions are not recorded in the order book of the exchange and are not displayed publicly, which allows to achieve a higher level of confidentiality.
In OTC deal with the help of a third party, customers solve the issues of liquidity, pricing and information sharing. Large investors prefer a trustful individual work with the personal support of an escrow agent, who will help to perform all transactions of funds deposit and final payments.