What is a Secondary market?

Dec 16, 2024

If you're interested in the financial market, you may have heard the term

"secondary market".

What is the secondary market?

The secondary market is an important part of the financial market, referring to the market where already issued assets or financial products are resold.

This market serves the purpose of providing liquidity for various financial products such as stocks, bonds, and derivatives, offering investors opportunities for trading. This includes trading not only on formal exchanges like the stock market or bond market but also includes trading in the over-the-counter (OTC) market.

Scope of the Market

As mentioned above, the scope is quite broad. Almost all types of assets, including stocks, bonds, derivatives, real estate investment products, and artworks, can be considered as financial products for this market. It's spread globally, and it constitutes a core part of the global financial system.

Functions of the Secondary Market

Providing Liquidity
The secondary market provides liquidity that allows assets to be bought and sold easily. This enables investors to quickly convert assets based on their need.
Price Formation
The current price of an asset is determined through the trades of market participants,
which increases the transparency and efficiency of the market.
Diversity
A variety of financial products and assets are traded, providing investors with diverse investment opportunities.

Considerations

When trading in the secondary market, the following factors should be considered.

Market Volatility
Trades in the secondary market can be more sensitive to market volatility.
Information Asymmetry
There may be a lack of information compared to assets traded on formal exchanges.
This can result in differing information among investors.

South Korea and the Secondary Market

The secondary market in South Korea is continuing to grow,
and innovations in the technology sector are expected to have a positive impact.
Regulatory reforms and market-friendly measures from the South Korean financial authorities are anticipated to further promote the development of this market.

The secondary market plays an important role in the financial market, offering investors various opportunities.
Understanding this market is essential for making effective investment decisions.

Cookie Deal supports the Secondary Market.

Cookie Deal provides useful information for those participating in the secondary market and helps with trading.
We assist in transactions related to the equity of growing domestic SMEs and startups.

Recently, demand for secondary funds for such transactions in the domestic market has been increasing.
If you wish to invest in the secondary market or sell your equity, please contact Cookie Deal, and we will help you think together and successfully sell.

[Market PRO Column] "Secondary Funds, breathing life into the frozen VC funding market... funds are pouring in. https://www.hankyung.com/article/202307277070i