The Fourth Market

What this video covers

• What the fourth market is: direct institution-to-institution trading with no broker-dealer intermediary whatsoever
• How Electronic Communication Networks (ECNs) function as automated electronic bulletin boards that match buy and sell orders instantly
• Why anonymity is the critical benefit for institutional investors executing large block trades, and how it prevents market prices from dropping before execution completes
• The three concrete benefits of fourth-market trading: no commissions or markups, faster execution through electronic matching, and total anonymity
• What ECNs can trade: both exchange-listed securities and over-the-counter (OTC) securities, not just listed securities
• The single most tested distinction between the third market and fourth market: dealer involved means third market, no intermediary means fourth market