DEFINITION of 'Secondary Liquidity'

A form of liquidity that is part of an initial public offering when shares are distributed to both retail and institutional players. These secondary parties may then sell the security to other interested buyers, with an exchange typically acting as an intermediary.

Secondary holders, or liquidity providers, often hold fewer shares and provide less liquidity and/or share volume than the initial underwriter.

BREAKING DOWN 'Secondary Liquidity'

When a stock or bond is traded in the secondary market, it falls into a number of different hands, both retail and institutional. These holders often have fewer shares than their underwriter counterparts. Furthermore, while they offer investors a valuable source for shares, the liquidity providers are almost always less liquid then underwriters, which may retain a large portion of the initial offering for long-term investment.

  1. Secondary Market

    A market where investors purchase securities or assets from other ...
  2. Impact Day

    The date on which a corporation makes a secondary offering of ...
  3. Secondary Offering

    A secondary offering is issuance of new or closely held shares ...
  4. Core Liquidity Provider

    An underwriter or a market maker that is a sizable holder of ...
  5. Primary Offering

    A primary offering is the first issuance of stock from a private ...
  6. Dollar Volume Liquidity

    The price of a stock or ETF multiplied by its daily trading volume ...
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