OTC Markets refer to a decentralized marketplace where financial instruments, such as stocks and bonds, are traded directly between parties without a centralized exchange. This system allows for greater flexibility and accessibility, enabling smaller companies to raise capital and investors to trade a wider range of securities. The term "OTC" stands for "over-the-counter," indicating that transactions occur through a network of dealers rather than on a formal exchange like the New York Stock Exchange or NASDAQ. OTC Markets are often associated with less regulated securities, which can carry higher risks but also potential rewards for investors.