SIE Types of Markets

Types of markets sorts trading into the primary market, where issuers sell new securities, and the secondary market, where investors trade with each other. The secondary market is then split into the numbered markets — first, second, third and fourth — by where listed securities change hands.

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Knowledge of Capital Markets · 16%80 questions13% hard

16%of the exam is Knowledge of Capital Markets, the section this topic sits in.

80questions on this topic in the PrepScore bank.

35%are understand-level questions — the dominant cognitive demand here.

3are EXCEPT / NOT items, where the answer is the odd one out.

What the SIE asks

What you actually need to know

Primary (issuer receives proceeds) versus secondary (investor to investor).
The first market: listed securities on an exchange.
Second, third and fourth markets, and what distinguishes each.
Exchanges versus OTC, and how quotations differ.

How this topic behaves

What 80 questions on it look like

The questions here sit close to the exam average for difficulty, with 13% rated hard. Most are understand-level: 35% of the topic.

comparison41%

scenario31%

concept28%

Question-type mix across the 80 questions in this topic.

From the bank

Three real types of markets questions

With the explanation — which is the part that teaches.

comparison · easy · recall

In market-structure terminology, the "first market" refers to the trading of which securities in which venue?

ASecurities traded directly between institutions without a broker-dealer
BExchange-listed securities traded on a registered securities exchangecorrect
CUnlisted securities traded over the counter
DExchange-listed securities traded over the counter, away from the exchange

Why B is correct

The first market is the trading of exchange-listed securities on an exchange. OTC trading of unlisted securities is the second market, OTC trading of listed securities is the third market, and direct institution-to-institution trading is the fourth market.

concept · medium · recall

Which statement best identifies the secondary market?

AIt is the first sale of new securities by an issuer to raise capital
BIt is the filing system used to update a registered person's Form U4
CIt is the market where investors trade previously issued securities with other investorscorrect
DIt is the fund accounting process used to calculate NAV at day-end

Why C is correct

The secondary market is where previously issued securities trade among investors. The issuer's new sale of securities is the primary market.

scenario · medium · apply

Two large institutions negotiate a block trade directly with each other, away from an exchange and without a broker-dealer acting between them. Which market is most directly described?

AThe primary market
BThe fourth marketcorrect
CThe issuer redemption market
DThe mutual fund NAV market

Why B is correct

The fourth market refers to direct institution-to-institution trading, typically away from exchanges and without a broker-dealer intermediary.

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FAQ

Types of Markets questions

What is the first market?

Exchange trading of listed securities — the traditional listed market.

What is the fourth market?

Direct trading between institutions without a broker-dealer intermediary, typically through electronic networks.

Where does the issuer get money?

Only in the primary market. Secondary market trades transfer money between investors.

Last reviewed 2026-08-28. Exam facts sourced to FINRA’s SIE exam page and the FINRA SIE content outline. Question counts describe the PrepScore bank, not the exam.

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