What is necessary for a stock to be traded OTC?

For a stock to be traded over-the-counter (OTC), the critical requirement is that there must be a buyer and a seller agreeing on a price. OTC trading occurs outside of formal exchanges like the NYSE or NASDAQ and relies on direct negotiations between parties. This trading mechanism often involves market makers who facilitate trades by providing liquidity and ensuring that there are buyers and sellers available.

The essence of OTC trading lies in the presence of willing participants who can agree on the transaction terms, including the price. This framework allows for a diverse range of securities, including those that may not meet the stringent listing requirements of major exchanges. Therefore, the cornerstone of OTC trading is indeed the mutual agreement between a buyer and a seller on the stock's price, which enables the transaction to take place.

In contrast, while factors like exchange listing, trading volume, and public promotion may influence a stock’s access to visibility and liquidity, they are not prerequisites for a stock to be traded OTC. The OTC market provides flexibility and opportunity for trades to occur based solely on the agreement between buyers and sellers.