Yellow Sheets is a term used to refer to the over-the-counter (OTC) market for trading fixed income securities, such as bonds and Treasury bills. The OTC market is a decentralized market where securities are traded directly between buyers and sellers, rather than on a centralized exchange.The term "Yellow Sheets" comes from the yellow-colored sheets of paper that were traditionally used to record OTC bond transactions. The information on these yellow sheets was compiled and distributed by the National Quotation Bureau (later renamed the National Association of Securities Dealers), which provided market participants with price quotes and other information about OTC securities.Today, the information that was once recorded on yellow sheets is now maintained and distributed electronically, but the term "Yellow Sheets" is still commonly used to refer to the OTC market for fixed income securities. The Yellow Sheets market is considered less transparent and less regulated than the centralized exchange-traded bond market, which can make it more difficult for investors to assess the creditworthiness and liquidity of the securities traded there. As a result, investing in the Yellow Sheets market may involve a higher degree of risk and requires a more thorough due diligence process for potential investors.
