What is often referred to as the "negotiated market" in the context of securities?

The term "negotiated market" refers specifically to the Over-The-Counter (OTC) market. In this context, the OTC market is one where securities are traded directly between parties without a centralized exchange. Transactions in this market are often negotiated between buyers and sellers, which allows for greater flexibility in pricing and terms compared to traditional exchanges.

In the OTC market, a broker-dealer acts as an intermediary for the transaction. This market primarily deals with stocks that are not listed on formal exchanges, providing access to a wide range of securities that may not meet the listing requirements for those exchanges. The characteristics of the OTC market, including the ability to negotiate the terms of each trade, distinguish it from markets where trades are conducted via auctions or through a central exchange.

Other market types, such as the first market, second market, and auction market, involve different trading mechanisms and structures. They tend to rely on either formal listing requirements or predetermined auction processes for price discovery. In contrast, the OTC market's negotiate nature highlights its unique role in the financial ecosystem, particularly for less liquid or smaller securities.