securities markets (3rd and 4th form)

hi, can someone please explain to me what exactly distinguishes them from one another? i dont seem to get the concept. also why is the tertiary market s subform of OTC and the 4th isnt?


So you have the first market, which is trading of exchange listed securities on the floor of an actual exchange. Think a customer order to buy 100 shares of Ford, which is routed by his brokerage firm to the NYSE to be filled by the Specialist/DMM in Ford. The Second Market is OTC trading of NON EXCHANGE LISTED securities, which is your NASDAQ listed stocks or OTCBB/PinkSheets issues. It’s a purely electronic marketplace without an actual trading floor. A customer places an order to buy 100 shares of a NASDAQ listed stock like GOOG, traditionally it is going to be filled OTC. The third market is where things get a little convoluted. So you have a FIRST MARKET stock like Ford that traditionally trades on an exchange floor, but with changes in technology and competition, it can now be traded OTC as well. So a customer is looking to buy 100 shares of Ford, and his brokerage firm looks at the first market and then looks at a third market ECN, sees he can get a better price on the third market and fills the trade for the customer. Remember the third market only applies to EXCHANGE LISTED STOCKS (NYSE, AMEX, Regional Exchanges…). The fourth market is basically just institutional trading. It’s not considered a subform of the OTC because it is done without the use of a broker and typically the volume and price aren’t reported, making it a “private” transaction.

thx eastcostj! much appreciated!