What is over-the-counter(also referred to as OTC)?

Over-the-counter describes a decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones, computers, or other forms of communication mediums. The foreign exchange market is the largest over-the-counter market in the world.
The OTC market is typically used for securities or assets not listed on a stock or derivatives exchange. Other forms of derivative financial instruments traded through an OTC network include swap, forward, swaption, and asset backed securities.