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An Introduction to Trading in the Financial Markets: Trading, Markets, Instruments, and Processes by R. Tee Williams

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2

Secondary Markets

As we explained in Book 1, secondary markets do not raise money for the companies or governments that issue securities. Instead, the secondary markets provide the facility to allow a current owner of a security to sell the security the owner no longer wants to someone else that would like to now own the security (see Figure 2.2). When an outstanding security or instrument trades, no money goes to the company or government that issues the security.3

image

Figure 2.2 Secondary markets permit instruments to be exchanged among investors and traders after the issue is initially sold to the public.

Instead, ownership passes between ...

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