Who can conduct transactions in the third market?

The third market refers to the trading of exchange-listed securities in the over-the-counter (OTC) market, often facilitated by broker-dealers. Registered broker-dealers who are also recognized as OTC market makers play a crucial role in this market by providing liquidity and enabling transactions on behalf of institutions or other clients. These firms must register with the appropriate regulatory bodies, ensuring they adhere to strict compliance standards, which helps protect investors.

While individual investors and some institutional brokers may participate in trading activities, they do not directly execute trades in the third market without the involvement of a registered broker-dealer. Market makers must also be registered to guarantee that they follow the regulatory requirements and maintain the integrity of trading activities. This is why the option related to registered broker-dealers as OTC market makers is the correct choice.