Difference Between Secondary Market and Primary Market

What is Secondary Market?

Secondary market is defined as a platform where investors buy and sell financial instruments (like stocks, bonds, and other securities). It is also known as the Aftermarket as this is where the second stage of the financial instruments take place after issuing for the first time in the primary market. Here, trading takes place between traders and other investors instead of the entities who issue their securities. Usually, people associate the stock market with the secondary market....

Functions of Secondary Market

The secondary market is the platform in which the major chunk of security (stock, shares, etc.) trading takes place. Some of the functions of the secondary market are,...

How does the Secondary Market Work?

It is known that the secondary market is where the investors are highly involved. They trade securities among themselves. The issuing company has no involvement in this market, only their shares are bought and sold by the investors, brokers, and dealers. They can only monitor the market and control the transactions, so that the management can make well-informed decisions....

Types of Secondary Market

The secondary market or the aftermarket is segregated into multiple categories. Primarily two categories are considered, Stock Exchanges and Over-The-Counter Markets....

Importance of Secondary Market

The secondary market is important to an economy due to the following reasons,...

Different Instruments in the Secondary Market

The aftermarket trades on different instruments can be categorised into three types,...

Advantages of Secondary Market

The secondary market offers numerous advantages for issuers, investors, and the entire financial system. Some of them are mentioned below:...

Disadvantages of Secondary Market

Apart from having pros of the secondary market, there exist some potential cons which the investors must be aware of:...

Difference Between Secondary Market and Primary Market

Basis Secondary Market Primary Market Purpose Involves the trading of existing securities among investors. Involves the issuance of new securities. Function Investors buy and sell previously issued stocks or bonds. Companies raise capital by selling newly issued stocks or bonds. Participants Brokers, Investors, and Dealers. Underwriters, Investors, and Issuing companies. Price Market-driven price based on market fluctuations. Fixed price determined by the underwriters. Volume A high volume of shares are transacted. A low volume of shares are issued. Regulated by Regulated by SEBI and other stock exchanges. Solely regulated by the SEBI....