Which type of certificates of deposit can be traded on a secondary market?

Negotiate or large certificates of deposit (CDs) are the type of CDs that can be traded on a secondary market. These CDs typically have a higher minimum deposit requirement, often starting from $100,000 or more, making them suitable for institutional investors or high-net-worth individuals. Because of their substantial face values, these negotiable CDs are issued with the option for investors to transfer them to other parties, creating liquidity in the market.

The ability to trade large CDs on a secondary market is significant as it allows investors to sell their interest in the CD before maturity, providing flexibility and access to funds that are otherwise locked for a fixed term. This feature distinguishes them from regular CDs and traditional savings accounts, which do not offer such trading options.

Regular CDs and traditional savings accounts typically have fixed terms and are not transferable, meaning they cannot be sold or traded before maturity. Zero-coupon CDs, while having unique characteristics (they do not pay interest periodically and are sold at a discount), also do not allow for secondary market trading in the same way large negotiable CDs do. Thus, negotiate/large CDs provide the necessary features that facilitate trading on the secondary market.