DETAILED TABLE OF CONTENTS 1. Participants in Trading Markets-"Professional" and "Public" 2. The Two Basic Types of Trading Markets in the United States. a. Contrasting aspects of the two types.. b. Similarities between types, differences within types and inter- 3. "Primary" and "Secondary" Markets Forms of Multiple Trading. CHAPTER V TRADING MARKETS-INTRODUCTION A. BASIC COMPONENTS OF TRADING MARKETS As noted in chapter I, the broad term "securities markets" encompasses both the markets for distribution of securities into public hands and the markets for continuous trading in outstanding securities. Markets for distribution of securities were the subject of chapter IV. Trading markets are considered in this chapter and chapters VI, VII, and VIII. It will be seen that the uses and mechanisms of trading markets are substantially different from those of distribution markets, although there is an overlapping area having imprecise boundaries but consisting of distribution into wider public ownership of blocks of securities already outstanding ("secondary distributions"; see ch. IV.C), and the handling of large blocks in the trading markets (see chs. VI.D.6.h, VII.C.6, and VIII.C). Of the four chapters dealing with trading markets, the present one contains general introductory material including brief discussions of basic components, concepts, and standards applicable to trading markets and basic differences and similarities between types of markets; chapters VI and VII contain detailed discussions of the two major types of trading markets, exchange markets and over-thecounter markets, respectively; and chapter VIII considers various interrelationships between the two basic types and among markets generally, including factors affecting choice of markets, characteristics of securities traded in different markets, institutional participation in markets and use of market mechanisms, over-the-counter trading in exchange-listed securities, and the role of regional exchanges as primary and multiple markets. 1. PARTICIPANTS IN TRADING MARKETS "PROFESSIONAL" AND "PUBLIC" Participants in the trading markets include both "professionals" and the "public." The professionals-those who make their livelihood in the securities business as underwriters, brokers, or dealers have widely varying characteristics and activities. At one extreme, the professionals may be members of giant wire houses with memberships on several exchanges and with nationwide or even worldwide networks of branches and correspondents; at the other, they may be oneman firms trading only in over-the-counter markets. The publicall who invest or trade in securities but are not in the securities business in the above sense-again show a tremendous range, from the very small or new investor who may lack market experience and sophistication and may depend for investment advice upon salesmen of varying degrees of skills and knowledge, to the great pension funds, 1 In general, this report does not consider the category of Government obligations, and devotes relatively little attention to corporate bonds as a separate category. 96-746--63-pt. 2-2 |