The Secondary market is an effective mechanism existing for the resale of the new issues which gives investors

the means to trade existing securities. In the secondary market one investors sell securities to another investor without involving the issuing firm. The secondary market also exists for trading of common stock ,preferred stock, bonds, debentures, warrants, options and future contracts.

Secondary Market Structure

Types of securities Equities Market Organized stock exchanges Over the counter market Third market Fourth market Organized exchanges (a relatively small amount) Over the counter market Organized stock exchanges

Bonds

Puts and calls

Patterns of secondary market

Secondary market

First market or Organized stock exchanges

Second market or Over the counter market (OTC)

Third market

Fourth market

Organized exchanges or First market First market allows the investors to sell securities to another investors without the presence and involvement of the firm that issued the securities. The OTC market

The OTC market is one of the most modern and efficient securities market in the world. It is not physically located market. Rather it consists of a number of broker-dealers throughout the country who are linked together through an e-mail or electronic communications network.

Diagram of the organized exchange, OTC market, and the third and fourth market
Third market Organized exchange Fourth market

The OTC market

The Third Market

The third market is an OTC marketing stock associated with an exchange. A number of broker dealers who are not members of Dhaka Stock Exchange (DSE) can make markets in stocks of DSE listed firms

The Fourth Market

The Fourth Market is a market where investors sells security directly to another investor without a brokerdealer as middlemen. Direct investor- to-investor trades occur through a communications network between block traders. A block is a single transaction involving 10,000 or more shares.