Secondary Market
What Does Secondary Market Mean?
The secondary market refers to the marketplace where the initial buyers of a financial product trade that product with other customers. This is commonly recognized as the stock market, where stocks or other securities are bought and sold after being initially offered by companies in an initial public offering (IPO).
The secondary market is also referred to as the aftermarket.
Insuranceopedia Explains Secondary Market
The secondary market encompasses various financial products that are bought and sold, including notes, company shares, bonds, and stocks. It is termed “secondary” because all these products have already been sold in the primary market.
The primary market involves the trading of initial public offerings (IPOs) by companies or financial institutions, where the prices of financial products are predetermined and remain fixed. In contrast, the secondary market is influenced by demand, which can lead to variations in the prices of financial products compared to their initial offering prices in the IPO.
