Kerb or curb trading platforms operate outside the traditional stock exchanges and offer traders opportunities outside their regulation. In this article we aim to examine this phenomenon of trading from within this special category of unregulated platforms as well as its characteristics, benefits and possible risks.
What Is Kerb/Curb Trading (Off Exchange/ Off Board Trading)
Off exchange or off board trading provides an alternative venue for buying and selling securities directly between market participants without going through an exchange system, often through electronic networks or Over The Counter arrangements (OTC arrangements).
Characteristics of Kerb (Curb) Trading:
- Flexibility:Kerb trading provides investors with greater trading hours flexibility compared to traditional exchanges that operate during fixed market hours only, offering investors additional trading opportunities outside normal market hours.
- Speed: Kerb trading can be executed quickly because transactions do not need to comply with formal exchange regulations and oversight.
- Greater Privacy: Kerb trading provides greater privacy, as trades between buyers and sellers occur directly between parties without as much public disclosure as is the case with exchange-traded securities.
Advantages of Kerb (Curb) Trading:
- Accessibility: Kerb trading makes itself accessible to a broader range of market participants, including smaller investors that do not meet all requirements set out by formal exchanges.
- Customization: Kerb trading allows more customized transactions such as large block trades or specific order types that suit individual investors' unique requirements.
- Diversification: Through kerb trading, investors have access to an expanded variety of securities not listed on formal exchanges - providing diversification benefits in their investment portfolios.
Risks and Considerations:
- Lack of Regulation: mes mes One significant risk associated with Kerb trading is its lack of regulatory oversight which increases potential risks associated with fraud, manipulation and insider trading activity. Investors should exercise extreme caution and perform due diligence before engaging in any type of Kerb trading.
- Liquidity Concerns: Kerb markets may have lower liquidity compared to formal exchanges, leading to wider bid-ask spreads and potentially making buying or selling securities more complex than expected.
- Information Disparity: Because kerb trading lacks public transparency, investors may experience difficulty accessing accurate and up-to-date information regarding securities that are being traded.
Kerb (curb) trading provides investors with another means for purchasing securities outside regulated exchanges, offering greater flexibility, accessibility, and potential customization than what can be offered through exchange-listed securities. With that being said, investors should carefully consider any risks that are associated with it such as lack of regulation and potential liquidity concerns as any investment activity involves significant research before engaging in it - just like when undertaking any investment activity such as trading kerb (curb).