The secondary market is where previously issued shares and bonds change hands between investors. The company does not receive money when you buy a listed share from another holder. Exchanges such as the ESX organise this trading with rules, brokers and settlement systems so prices can form openly.
Key takeaways
- Secondary trading is investor to investor; the issuer is not the seller.
- Liquidity in the secondary market affects how easily you can enter or exit.
- Prices here set the daily marks you see on screens and in the news.
- A healthy secondary market supports future primary fundraising.
Why it matters in Ethiopia
Most activity new investors see on the Ethiopian Securities Exchange is secondary trading in already listed names. Understanding that distinction clarifies when your money funds a company and when it simply changes who owns the share.