Category: Secondary Market

The secondary market is the aftermarket in which previously issued financial instruments such as stocks, bonds, options, and futures are traded. In the secondary market, investors buy securities that have been already sold to the primary market and finally sell to the other investors. The pricing of the securities traded in the secondary markets is determined by the demand and supply feature of the securities traded. When investors are hopeful about any security, it goes up. And when investors think about the underperformance of any security, the price goes down. The secondary market is the most liquid market worldwide where securities valued at billions of dollars. The secondary market is one of the major sources of long-term finance for corporations since the 16^th century. Stock exchanges provide the liquidity of the secondary market globally. For the unique feature of liquidity of the secondary market, it has been playing a major role in driving finance capital formation globally. World’s largest stock exchanges such as the New York Stock Exchange, London Stock Exchange, and Nasdaq provide a centralized and liquid secondary market for investors who hold the ownership of stocks that trade on those stock exchanges. In Bangladesh, the secondary market goes to the Dhaka Stock Exchange and the Chittagong Stock Exchange. Besides the widely known secondary markets organized through the stock exchanges, there also exist private secondary markets that actually deal with the trading activities of investor commitments to private equity funds.