Characteristics of Over-the-Counter Derivatives

In the world of finance, derivatives play a crucial role in risk management and speculation. One common type of derivative is the over-the-counter (OTC) derivative, which is traded directly between two parties without a central exchange. OTC derivatives can be tailored to meet the specific needs of the parties involved, but they also carry unique risks compared to exchange-traded derivatives.

Which of the following statements accurately describes a characteristic of over-the-counter derivatives?