What type of market is characterized by decentralized trading without a central exchange?

The correct answer is Over-the-Counter Market. This market operates without a centralized exchange, which means transactions occur directly between parties, typically through electronic trading systems or over the phone. In the Over-the-Counter market, securities are traded through a network of dealers rather than a formal exchange, allowing for greater flexibility in the types of securities that can be traded, including those that might not meet the listing requirements of traditional exchanges.

This decentralized structure often facilitates the trading of a wider range of financial instruments, including stocks of smaller companies, bonds, derivatives, and other securities that are less commonly traded on major exchanges. In contrast, the other markets mentioned—such as the Stock Market and Futures Market—are generally characterized by centralized trading platforms. The Exchange Market refers specifically to organized exchanges where securities are listed and traded in a regulated environment, further emphasizing the organized, formal structure that the Over-the-Counter Market lacks. Understanding this distinction is crucial for grasping different trading environments within the financial markets.