A secondary market is one in which financial instruments are resold to investors. Issuers do not raise new capital in the secondary market, the issuer of the security does not receive money from the sale. Trading takes place among investors. Investors buying and selling securities in the secondary market Stock brokers can avail the services of firms that buy or sell securities for their clients.

We classify secondary markets by the way they trade in what is referred to as market structure. Order driven and quote driven are the two overall market structures for trading financial instruments.

Market structure is the mechanism by which sellers and buyers interact with each other to determine quantity and price. In an order driven market structure, buyers and sellers submit their bids through their broker, who sends these bids to a centralized location for bid matching and transaction execution. Order driven market is also known as auction market.

In a quote driven market structure intermediaries quote prices at which public participants trade. Market makers provide a bid quote to buy and an offer quote to sell, earning revenue from the spread between these two quotes. Market makers thus profit from the spread and turnover of their security inventory. There are hybrid market structures that have elements of both quote driven and order driven market structures.

Exchanges are central trading venues where financial instruments are traded. Financial instruments must be listed on an organized exchange. Listing means that a financial instrument has been accepted for trading on an exchange. An issuer must meet the requirements set by the exchange to be listed.

The main organized exchange for common stocks is the New York Stock Exchange (NYSE). A corporation's common stock must meet minimum requirements for pretax earnings, net tangible assets, market capitalization, and the number and distribution of publicly held shares to be listed on the NYSE. In the United States the SEC must approve a market to qualify as an exchange.

In contrast, the over-the-counter market (OTC market) is generally the trading of unlisted financial instruments. For common stock there are listed and unlisted stocks. Although there are listed bonds, the bonds are generally unlisted and thus trade over the counter. Same is the case with loans. The foreign exchange market is the OTC market. There are listed and unlisted derivative instruments.

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