What defines Fourth Markets in trading?

Fourth Markets are defined by the interaction in trading that occurs directly between investors, bypassing traditional intermediaries such as brokers. This framework allows institutions and high-net-worth investors to trade large blocks of shares directly with one another, often facilitated by electronic trading systems that support these transactions. The primary benefit of Fourth Markets is that they reduce the costs associated with trading through brokers and can help achieve better pricing and efficiency for participants.

This direct approach enhances liquidity among participants who are seeking to transact significant volumes without disrupting market prices, which is particularly advantageous for large institutional players. Fourth Markets are contrasted with other market types where intermediaries play a critical role in trades.

The other options pertain to concepts that do not accurately depict Fourth Markets. Trading through traditional exchanges, reliance on printed stock certificates, and the mandatory involvement of regulatory bodies are characteristics associated with different market structures, primarily First, Second, or Third Markets. These elements do not define the essence of Fourth Markets, which is fundamentally characterized by direct trading between parties.