So you all understand3 Sep 2020 14:14
Off-book trades can have a higher risk of counterparty default, as there are very few rules or contractual obligations.
For some off-book trades, there is no official record kept at all. The drawback of this, is that off-book trading is often used by individuals looking to conceal their behaviour from others.
The lack of official regulation can also be a cause for concern, as there is no obligation for either party to report the trade to an exchange or publicise the orders to a governing body. And even when off-book trades are reported, so that they are executed ‘on exchange’, the process can be time consuming and experience significant delays. This is because the exchange doesn’t have to record the trade immediately.