Which market is characterized by institutional investors trading directly through electronic communications networks?

The fourth market is characterized by institutional investors trading directly among themselves, typically through electronic communications networks (ECNs). This type of market allows for the trading of securities without the intermediation of traditional exchanges or brokers. The primary advantage of this system is that it facilitates large volume trades and provides greater anonymity for the parties involved.

In this market, trades occur at negotiated prices, and because they are conducted electronically, they can happen outside of standard market hours, enhancing liquidity. This is particularly valuable for institutional investors who may want to execute large orders without affecting the market price significantly. The other market types, such as the first, second, and third markets, involve different levels of intermediation and trading mechanisms, making them distinct from the direct trading approach found in the fourth market.