When the NYSE first started, some securities were traded with
people called specialists, and some were not. For those stocks that
were not on the NYSE, the brokers went to a specific coffee shop in
New York (which is still there) and asked around for buyers or
sellers of stock not traded by the specialists on the street where the
NYSE was first formed.
• When they found someone, they sat down and had a cup of coffee
at the counter while they negotiated the price of the stock, such as
First Tennessee National Bank (which is still an OTC stock).
• Once the price was agreed upon, the broker went back to his office
and told the client the price at which the trade was executed.
• For a period of time, some people joked that the OTC should
have been called OTP, for Over-The-Phone.
• Now trading has evolved and is transacted via computer.
– So now, industry professionals joke that it is still appropriate to
call it OTC: “Over-the-Computer”
