The Stock and Bond Markets
This article discusses over-the-counter (OTC) markets and their role within the primary and secondary markets we discussed earlier. OTC markets are not subject to the same regulations as primary markets. OTCs are considered secondary markets, like stock exchanges such as the New York Stock Exchange (NYSE). These two secondary markets differ in that OTCs are decentralized markets, like NASDAQ, while stock exchanges are centralized and allow traders to meet and conduct their trading activities. What are the different financial markets?
Stock and Bond Markets
Primary and Secondary Markets
The stock and bond markets are sub-divided into primary and secondary markets. The primary market, or 'new issue markets', is where newly created financial assets (for example a company that issues a bond certificate or a stock) are put on exchange. The secondary market deals with the trading of previously issued financial assets, where transactions between investors occur. The secondary market is where the highest volume of trading takes place.
Figure 5 Asset trading in the financial markets