Third market in finance

Finance

"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...

, refers to the trading of exchange-listed

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

 securities in the over-the-counter

Over-the-counter (finance)

Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....

 (OTC) market. These trades allow institutional investors to trade blocks of securities directly, rather than through an exchange, providing liquidity and anonymity to buyers

Third market trading was pioneered in the 1960s by firms such as Jefferies & Company although today there are a number of brokerage firms focused on third market trading, and more recently dark pools of liquidity.

See also

• Primary market
  Primary market
  The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process...
  
  
• Secondary market
  Secondary market
  The page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....
  
  
• Fourth market
  Fourth market
  Fourth market trading is direct institution-to-institution trading without using the service of broker-dealers. It is impossible to estimate the volume of fourth market activity because trades are not subject to reporting requirements. Studies have suggested that several million shares are traded...
  
  
• Private equity secondary market
  Private equity secondary market
  In finance, the private equity secondary market refers to the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds....
  
  
• Dark pools of liquidity