d

Secondary markets provide a platform for buyers and sellers of securities to connect and transact, supporting the primary markets and enabling capital raising for corporations.

Liquidity refers to the ability to buy or sell a security easily. A security that can be easily sold is considered very liquid, while those that are difficult to sell are termed illiquid.

The four types of market centers are: 1. Exchanges 2. Over-the-Counter (OTC) market 3. Nasdaq (Third Market) 4. Electronic Communication Networks (ECNs)

Exchanges have a physical location and operate as auction markets where trades occur on the floor, while the OTC market is a decentralized electronic network without a physical trading floor.

A Designated Market Maker (DMM) is a member of an exchange responsible for maintaining an inventory of a specific security and ensuring liquidity, while maintaining a fair and orderly market.

Floor brokers represent their firm and clients on the exchange floor, executing trades on behalf of customers.

A two-dollar broker assists floor brokers by placing trades for them when they are overwhelmed, receiving a fee for their services.

The bid price is the price at which a dealer buys a security from a customer, while the ask price is the price at which a dealer sells a security to a customer. The difference between them is known as the spread.

The spread represents the market maker's income and is the difference between the highest bid and the lowest ask price in the OTC market.

The Third Market, or Nasdaq Intermarket, is where exchange-listed securities are traded in the OTC market by registered market makers, provided trades are reported to the Consolidated Tape.

The Fourth Market is a trading market for institutional investors where large blocks of stock trade directly between parties through Electronic Communication Networks (ECNs), without the involvement of brokers.

Dark pools are private trading venues where large-volume transactions occur without public visibility, allowing institutional traders to execute orders anonymously without impacting market prices.

The NYSE trades from 9:30 am to 4:00 pm ET on business days, with many OTC market makers extending trading until 6:30 pm.

Market makers in the OTC market maintain an inventory of securities and facilitate trading by buying and selling throughout the day, competing to attract orders from brokers.

Exchanges ensure a fair trading environment through the presence of Designated Market Makers (DMMs) who maintain liquidity and a fair market for assigned securities.

The Securities Exchange Act of 1934 regulates trading activities in the secondary markets and established the SEC to oversee securities exchanges and the OTC market.

In primary markets, the seller is always the issuer of the security, while in secondary markets, the seller is never the issuer; instead, investors sell securities to other investors.

The OTC market typically trades unlisted stocks, most bonds, including municipal bonds and Treasury debt.

The Consolidated Tape is important in the Third Market as it requires that all trades of exchange-listed securities executed in the OTC market be reported within 10 seconds of execution.

An auction market is characterized by buyers and sellers calling out their best bids and offers to transact business at the best possible price, as seen in exchanges like the NYSE.