SECONDARY MARKET

A place where buyers and sellers indulge in Market for new shares or securities
trade
.
of financial securities 

 Investors buy and sell securities from other investors

 SECONDARY MARKET

• A secondary market is a platform where investors can easily buy or sell

securities once issued by the original issuer, be it a bank, corporation, or

government entity.

• Referred to as an aftermarket, it allows investors to trade securities freely

without interference from those who issue them.

 FUNCTIONS
• Maintaining the Fair Price of Shares :maintain the fair price of shares depending on the balance of demand
and supply.

• Offering Liquidity and Marketability:Second-hand shares are of no use if they cannot be sold and bought
for liquid cash whenever needed. 

• Facilitating Capital Allocation: facilitate capital allocation by price signaling for the primary market.

• Adjusting the Portfolios:allow investors to choose shares for buying as well as for selling to build a solid
portfolio of shares that offers maximum returns.
.

TYPES
• Stock exchanges are centralised platforms where
STOCK securities trading take place
• A stock exchange itself acts as a guarantor, and the
EXCHANGE counterparty risk is almost non-existent

• OTC markets are decentralised, comprising

OVER-THE- participants engaging in trading among themselves.
• They retain higher counterparty risks in the
COUNTER absence of regulatory oversight, with the parties
directly dealing with each other.