The four main types of stock markets are:
- Primary Market:
- The primary market is where new securities are issued for the first time. This is also known as the new issue market. Companies raise capital by issuing stocks or bonds to the public through Initial Public Offerings (IPOs). In the primary market, the issuer receives the funds directly from the investors.
- Secondary Market:
- The secondary market is where previously issued stocks and bonds are bought and sold. Investors trade among themselves, and the company does not receive any funds from these transactions. Major exchanges like the New York Stock Exchange (NYSE) and NASDAQ operate in the secondary market.
- Over-the-Counter (OTC) Market:
- The OTC market is a decentralized market where stocks not listed on major exchanges are traded. These stocks are typically smaller companies, and trades are executed through dealer networks rather than centralized exchanges. Examples include the OTC Bulletin Board (OTCBB) and Pink Sheets.
- Foreign Exchange (Forex) Market:
- While not a stock market in the traditional sense, the Forex market is a global marketplace for trading currencies. It is the largest and most liquid market in the world. Investors and institutions trade currencies for speculation, investment, or hedging purposes.
Each of these markets plays a crucial role in the functioning of the overall financial system. Let me know if you need more details on any of them!