Types of Markets

What this video covers

• The four market framework and why securities markets progress from creation to increasingly direct trading
• What happens in the primary market: new securities are issued and sold for the first time, and the issuer receives the money
• What happens in the secondary market: previously issued securities trade between investors, and the selling investor receives the money
• Why the third and fourth markets are both subsets of secondary market activity, not separate primary markets
• The third market specifically: exchange-listed securities traded over the counter (OTC), not unlisted securities
• The fourth market specifically: direct institution-to-institution trading via Electronic Communication Networks (ECNs) with no broker-dealer intermediary involved
• How to spot the most tested trap: who gets the money (issuer vs. selling investor) and whether a broker-dealer is present