In order to understand the stock market, you must first understand the different types of markets. There are three different types of markets: primary, secondary, and tertiary. The primary market is where stocks and bonds are initially offered to the public. The secondary market is where these securities are bought and sold after they have been issued on the primary market. Finally, the tertiary market is made up of all other markets for financial assets (e.g., electronic, OTC, physical). In this blog post, we will discuss each type of market in more detail!
The primary market is where newly issued securities are bought and sold. This market is also sometimes referred to as the “new issues” market. When a company wants to raise capital, they will issue new securities on the primary market. These securities can be either equity (e.g., stocks) or debt (e.g., bonds). Once these securities have been issued, they can then be traded on the secondary market.
The secondary market is where existing Securities are bought and sold. This market is also sometimes referred to as the “secondary trading” market or the “aftermarket.” On the secondary market, investors can trade stocks and bonds that have already been issued on the primary market. The secondary market is much larger than the primary market, as it includes all of the securities that have been issued on the primary market.
The tertiary market is made up of all other markets for financial assets. This includes markets such as the electronic, over-the-counter (OTC), and physical markets. The tertiary market is where investors trade securities that are not easily traded on the primary or secondary markets. For example, a company might issue bonds that are not traded on the stock exchange. These bonds would then be traded on the OTC market.
Now that you know about the different types of markets, you can begin to understand how the stock market works! Stay tuned for our next blog post, where we will discuss the different types of orders.
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