A secondary market refers to a financial marketplace where investors engage in the buying and selling of securities that have already been issued by companies. It provides a platform for trading securities that have already undergone their initial issuance in a primary market.

Unlike primary markets, where securities are offered and sold directly by the issuing company to investors, secondary markets facilitate transactions between investors themselves. These markets offer liquidity by providing a venue for investors to buy or sell their existing securities to other interested parties. This allows investors to adjust their investment portfolios, capitalize on market opportunities, or exit their positions.

Secondary markets can exist in both public and private contexts. Public secondary markets, such as stock exchanges, are widely known platforms where shares of publicly traded companies are bought and sold. These markets operate with established rules and regulations, enabling transparent and efficient trading. Private secondary markets, however, deal with the trading of securities in private companies that are not listed on public exchanges. Private secondary markets often involve accredited investors and provide an avenue for shareholders of private companies to seek liquidity by selling their shares to other investors.

Overall, secondary markets play a crucial role in the financial ecosystem by enhancing liquidity, facilitating price discovery, and enabling investors to trade previously issued securities, whether in publicly traded companies or private ventures.