Chartered Alternative Investment Analyst (CAIA) Practice Exam 2026 – All-in-One Guide to Master Your Certification!

The fourth market refers to the trading of securities directly between private institutions without the involvement of brokers or exchanges. This market facilitates large transactions and allows institutions to access liquidity directly from one another. Such direct trading is especially prevalent in securities that may not be actively listed on public exchanges, enabling institutional investors to execute trades at negotiated terms and prices.

In contrast, the primary market involves the initial issuance of securities directly by companies to investors, often through underwriting, while the secondary market pertains to the buying and selling of already issued securities among investors. The third market usually refers to the trading of exchange-listed securities in the over-the-counter (OTC) market.

The focus on institutional trading and the lack of mediating parties define the fourth market, making it unique among the various trading venues. This direct trading mechanism is particularly beneficial for large institutions seeking to manage their portfolios efficiently while minimizing market impact.