Transferability is an essential characteristic of securities.
This trading is called the aftermarket or secondary market. Secondary
markets often consist of what is called an exchange to facilitate
the meeting of buyers and sellers. They are often referred to as
stock exchanges, even though there are exchanges such as the Chicago
Board of Options Exchange, where no stocks are traded. The International
Securities Market Association (ISMA) is the trade association for
the banks and other investment institutions that are active in
the secondary markets.
Public Offers and Private Placements
In the primary markets, securities may be offered to the public
in a public offer. Alternatively, they may be offered privately
to a limited number of persons in a private placement. Often
a combination of the two is used. The distinction between the
two is important to securities regulation and company law.
Another category, sovereign debt, is generally sold by auction
to a specialized class of dealers.
Listing and OTC Dealing
Securities are often listed in a stock exchange, an organized and
officially recognized market on which securities can be bought
and sold. Issuers may seek listings for their securities in order
to attract investors, by ensuring that there is a liquid and
regulated market in which investors will be able to buy and sell
Growth in informal electronic trading systems
has challenged the traditional business of stock exchanges.
Large volumes of
are also bought and sold "over the counter" (OTC). OTC
dealing involves buyers and sellers dealing with each other by
telephone or electronically on the basis of prices that are displayed
electronically, usually by commercial information vendors such
as Reuters and Bloomberg.
There are also eurosecurities, which are securities that are issued
outside their domestic market into more than one jurisdiction.
They are generally listed on the Luxembourg Stock Exchange or admitted
to listing in London. The reasons for listing eurobonds include
regulatory and tax considerations, as well as the investment restrictions.
International Debt Markets
London is the center of the eurosecurities markets. There was a
huge rise in the eurosecurities market in London in the early
1980s. Settlement of trades in eurosecurities is currently affected
through two European computerized systems called Euroclear (in
Belgium) and Clearstream (formerly Cedelbank in Luxembourg).