Primary Market

– The market where a company raises capital for the first time.
– The market offers an opportunity for investors to buy securities directly
from the issuing company. By buying securities or stock from the primary
market, investors help companies to raise capital.

2 Public Issue
– Initial Public Offer (IPO): public issue made by an unlisted company for
the very first time, which after making issue lists its shares on the
securities exchange.
– Further Public Offer (FPO): public issue made by a listed company, for
one more time.

Secondary Market
– Refers to a market where securities are traded after being initially offered
to the public in the primary market and listed on the stock exchange.
– Majority of the trading is done in the secondary market.
– Secondary market compares equity markets and the debt markets.

2 Special Categories in Secondary Market

– Auction Market: it is the place where individuals and institutions come
together and announce the buy and sell prices.
– Dealer Market: unlike the auction market, the dealer market does not
require the parties to gather in a central location. Instead, all market
participants participate through electronic networks.

Primary Market Vs. Secondary Market (Differences)

Basis of Comparison Primary Market Secondary Market

Meaning A platform that offers
security for the first time
in the primary market.
Another Name New Issue Market (NIM)
Type of product Products are limited, and
mainly include IPO and
FPO.
Purchase type All the purchases in this
market happen directly.
Frequency of selling Security can be sold to the
investors just once in this
market.
Parties involved Company and the
The market where
investor’s trade already
issued securities.
After market or share
market
Many products are
available such as shares,
warrant derivatives and
more.
The issuer (company
raising capital) is not
involved in the trading.
Here the traders can buy
and sell the shares as
many times they want.
Here investors buy and
 investors are involved in sell the securities among
buying and selling the themselves.
security.
Beneficiary Company Investors
How to identify Investors primarily rely Several tools are available
investment? on prospectus and word- to the investors to help
of-mouth publicity to pickthem pick good
an investment in the investments, such as price
primary market. to earnings, price to book,
price to sales and more.
Intermediary Underwriters are the Here the intermediaries
intermediaries in the are the brokers.
primary market.
Purpose Help new and existing Does not provide funding
companies to raise capital to companies; rather help
for expansion and investors to make money.
diversification.
Price The company sells the Both buy and sell-side
shares to the investors at investors work towards
a fixed price. finding the best price for
trade.
Presence There is no organization There is a geographical
set up for the primary setup and organizational
market. presence for secondary
market.
Rules and regulations The company issuing Here investors and
securities goes through a brokers need to follow the
lot of regulation and due rules set by the exchange
diligence. and the governing agency.