Tuesday, March 20th 2018

Secondary Market

Secondary Market Meaning:
In stock market terminology, the term Secondary Market refers to the market in which securities are freely traded by all market participants. Examples of a Secondary Market include the stock and bond exchanges, commodities futures exchanges and the foreign exchange market.

Secondary Market Example:
For example, once securities have been offered on the primary market through a network of brokerages and investment bankers, they are then ready to be released into the Secondary Market. Often, popular stocks which have just been issued by new companies will have a large following. The price of the stock is fixed in the primary market, as clients of investment bankers get the IPO price. Nevertheless, in the Secondary Market, the price is allowed to float at whatever price the public is willing to pay for the stock. This can make the stock price extremely volatile on the first day of trading in the Secondary Market.

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