What is another term for the over-the-counter (OTC) market where securities are traded without being listed on an exchange?

The over-the-counter (OTC) market refers to a decentralized market where securities are traded directly between parties without being listed on a formal exchange. This trading environment is often referred to as the second market. In this context, the first market typically refers to the primary market, where securities are created and sold for the first time; the second market encompasses the activities of buying and selling existing securities outside of formal exchanges.

The nature of the second market allows for more flexibility and accessibility, enabling a wide range of financial instruments to be traded. As a result, the second market plays a crucial role in providing liquidity for securities that may not meet the requirements for listing on major exchanges, thus facilitating greater trading opportunities across various asset classes.

Understanding these terms and their applications is essential for navigating the financial markets, particularly when dealing with instruments that are not available on traditional stock exchanges.