Over the Counter

Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without any supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, mitigates all credit risk concerning the default of one party in the transaction, provides transparency, and maintains the current market price. In an OTC trade, the price is not necessarily published for the public.

OTC is one of factor of difference between future and forward contract. Basically, Forward contact is OTC (off exchange 交易所)and price is public and fixed. 

Payment notes:
CLS (originally Continuous Linked Settlement) is a specialist US financial institution that provides settlement services to its members in the foreign exchange market (FX). Although the forex market is decentralised and has no central exchange or clearing facility, firms that chose to use CLS to settle their FX transactions can mitigate the settlement risk associated with their trades.^[1]

official website:
1. http://www.cls-group.com/Pages/default.aspx
2. https://www.youtube.com/watch?v=__t4_B7OdyM
3. http://www.cls-group.com/MC/Pages/Video.aspx
4. http://www.federalreserve.gov/paymentsystems/cls_protocol.htm
5. Payment @ Hk: http://www.bis.org/publ/cpss105_hk.pdf

Personal Notes:
=>Net settle =>  hedge counterparty risk

CLS does this through the operation of a Payment-versus-Payment (PvP) settlement service which mitigates settlement risk for the FX transactions of its Settlement Members and their customers (Third Parties).

Payment versus Payment (“PvP”) A mechanism in a foreign exchange settlement system to ensure that a transfer of one currency occurs only if a transfer of the other currency or currencies also takes place, which will be final and irrevocable.  The Cross Currency Payment Matching Processor is a core component linked with Real Time Gross Settlement (“RTGS”) systems of various clearing currencies to ensure that both legs of a foreign exchange transaction are settled simultaneously to eliminate Herstatt risk. Currently, PvP settlement of US dollar/Hong Kong dollar, US dollar/renminbi, euro/US dollar, euro/Hong Kong dollar, euro/renminbi, renminbi/Hong Kong dollar, US dollar/Malaysian Ringgit and US dollar/Indonesian Rupiah foreign exchange transactions is supported.  Also known as delivery against payment (DAP), delivery against cash (DAC) and cash on delivery.