Market Structure: Rapid Fire

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Chapters in this video

  1. 0:00 The four markets mapped out
  2. 0:53 Primary versus secondary: who gets paid
  3. 1:51 Follow-on offering versus secondary offering
  4. 2:47 Third and fourth market traps
  5. 3:52 Market makers, spreads, and the exchange / OTC memory aid
  6. 5:26 Top market structure gotchas
  7. 6:12 Rapid-fire exam recap

What this video covers

  • The primary market: issuer receives proceeds on initial public offerings (IPOs), follow-on offerings, and new municipal bond issues
  • The secondary market: selling investor receives the money, not the issuer, on every trade after the first sale
  • Follow-on offering versus secondary offering: company issues new shares (primary) versus existing shareholders sell their own shares (secondary)
  • Third market: exchange-listed securities traded over-the-counter (OTC) off the exchange with a dealer intermediary
  • Fourth market: institutions trading directly via electronic communication networks (ECNs) with no broker-dealer in the middle
  • Market makers, the bid-ask spread, and the compensation dealers earn for providing liquidity
  • The memory aid linking exchange to listed to auction, and OTC to unlisted to negotiated

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