Third market

Exchange-listed securities, such as those that are traded on the New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX), may also be bought and sold off the exchange, or over-the-counter (OTC), in what is known as the third market.

Typically, third-market transactions are large block trades involving securities firms that may or may not be members of the exchange and institutional investors, such as investment companies and pension funds.

With the advent of electronic communications networks (ECNs) more institutional investors are buying and selling in this way. Among the appeals of the third market are speed, reduced trading costs, and anonymity.