A centralized market is a central exchange where you can buy and sell things in one place. It is very organized, managed by an impartial clearing house and with transparent prices, giving participants confidence and security. The New York Stock Exchange for example is a centralized market.
This is in stark contrast to a decentralized market, where there is no secure exchange or clearing house to manage the trades. Instead this “middle man” is removed and trading is accomplished by directly connecting buyers to sellers. Think: illegal black markets. Or the market for rare coins or stamps or baseball cards. A lot of private transactions online (or in deserted parking garages).
Related or Semi-related Video
Finance: What is an Auction Market?13 Views
Finance a la shmoop... what is an auction market.. next up on the block [Man speaking on stage]
we've got stock in the company comb Depot....
okay yeah so the New York
Stock Exchange is an auction market and you have no idea how much caffeine I had [Man holding a monster energy drink]
to have to get that right which means that the prices on the new york stock
exchange happen during a bidding process we're matching offers get you know [People frantically rushing to bid for stocks]
matched... buyers and sellers buy and sell at the
same time so in essence two transactions are happening at once the opposite of
this sort of market is the over the counter or OTC market where dealers are
the ones holding all the cards and they ultimately determine the price by [Dealer with the cards]
creating a spread from where they're willing to sell your shares and what
price they'll pay to buy your shares but in an OTC market well you don't get to [Dogs running side by side]
feel like you're watching the last leg of a greyhound race so you don't get all
my caffeinated auction talk there which is kind of cool we like that, right..right?
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