Trading in stocks and bonds that does not take place on stock exchanges .
Such trading occurs most often in the U.S., where requirements for listing stocks on the exchanges are strict. Schedules of fees for buying and selling securities are not fixed in the over-the-counter market, and dealers derive their profits from the markup of their selling price over the price they paid. Many bond issues and preferred-stock issues, including U.S. government bonds, are listed on the New York Stock Exchange but have their chief market over-the-counter. Other U.S. government securities, as well as state and municipal bonds, are traded over-the-counter exclusively. Institutional investors such as mutual funds often trade over-the-counter because they are given volume discounts not offered on the exchanges. The regulation of the over-the-counter market is carried out largely by the National Association of Securities Dealers, created by Congress in 1939 to establish rules of conduct and protect members and investors from abuses. See also NASDAQ .