Primary Market VS Secondary Market

Primary Market VS Secondary Market

Primary Market is a market where securities are created for the first time, on the other hand, the secondary market is a market in which they are traded between buyers and sellers. For example, IPO is the product of the primary market in which investors buy the shares directly from the issuer, and in the secondary market is commonly referred to as the stock market. In the secondary market previously issued shares are traded between buyer and selling without company insolvency.

 



Comparison Between Primary Market and Secondary Market

 

The basis of Comparison Between Primary market vs Secondary market         

Primary Market

Secondary Market

Meaning

A marketplace for new shares is Primary Market

Place where formerly issued securities are traded is Secondary Market

Another name

New Issue Market (NIM)

After Market

Type of Purchasing

Direct

Indirect

 

Financing

It helps to supply funds to budding enterprises and also to existing companies for expansion and diversification

It does not provide funding to enterprises

How many times security can be sold?

Only once

Multiple times

 

Buying and Selling

Buying & selling is between Company and Investors

Buying & selling is only between Investors

 

Who will gain the amount on the sale of shares?

Company

Investors

 

Price

Fixed price

Fluctuates depends on the demand and supply force

Organizational difference

Not rooted in any specific spot or geographical location

It has a physical existence


Types of Primary Market Issuance

  • Public issue
  • Private Placement
  • Preferential Issue
  • Qualified Institutional Placement
  • Right and bonus issues


Conclusion

Primary Market is a market where securities are created for the first time, on the other hand, the secondary market is a market in which they are traded between buyers and sellers. There are some comparisons between both markets on the above table and we also discussed types of primary markets.

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