Secondary market trading involves the buying and selling of previously issued financial instruments between investors. This occurs after the initial issuance of an asset, providing liquidity for existing holders. Examples include trading stocks on exchanges or cryptocurrencies on various digital asset platforms. This activity establishes current market prices and facilitates asset transfer among participants, contributing to market efficiency.
Context
For digital assets, secondary market trading faces challenges related to regulatory oversight, market manipulation, and custodial solutions. The fragmentation of liquidity across numerous exchanges also presents operational hurdles for efficient price discovery. Future developments aim for greater regulatory harmonization, improved market surveillance, and the establishment of institutional-grade trading venues to enhance market integrity and overall efficiency.
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