Legal Definitions - secondary market

A secondary market is a marketplace where previously issued financial instruments, or goods and services that have already been sold at least once, are bought and sold again. It facilitates transactions between buyers and sellers who are not the original issuers or first-time purchasers of the item.

Here are some examples to illustrate the concept of a secondary market:

• The Stock Exchange: When a company first offers its shares to the public through an Initial Public Offering (IPO), those shares are sold in the primary market. However, once those shares have been purchased by initial investors, any subsequent trading of those shares between investors on platforms like the New York Stock Exchange or NASDAQ occurs in the secondary market. The company itself does not directly receive funds from these secondary transactions; instead, ownership simply transfers from one investor to another.

• Used Car Dealerships: When a car manufacturer sells a brand-new vehicle to its first owner, that transaction takes place in the primary market. However, when that owner later decides to sell their car to a dealership, or directly to another individual, that transaction is part of the secondary market. The car has been previously owned and used, and its resale constitutes a secondary transaction, distinct from its initial sale as a new item.

• Online Ticket Resale Platforms: Imagine a popular concert where tickets are initially sold by the venue or an official ticketing agent. This initial sale is a primary market transaction. If a ticket holder then decides to sell their ticket to another fan through an online platform like StubHub or Ticketmaster's resale marketplace, this transaction occurs in the secondary market. The ticket has already been purchased once, and its subsequent sale facilitates a transfer of the right to attend the event from one individual to another, without the original issuer (the venue or artist) being directly involved in the resale revenue.