What is the Primary Market and the Secondary Market in terms of IPO investment?

Question

What is the Primary Market and the Secondary Market in terms of IPO investment?

Accepted Answer · 2020-02-14

Primary Market

It is the place where securities are offered to the public for the first time which means that the IPO is issued and opens for a subscription for the first time in the market. It is also called an initial market. The issuer company thus gets the capital required to carry on investments.

Secondary Market

Once the capital is raised by the company, IPO shares get listed on the stock exchange and are ready to be traded in the market. This is known as the secondary market. Stock Exchanges NSE and BSE are part of the secondary market.

	Primary Market	Secondary Market
Differences	Securities are offered as IPO to the public for the first time. The involvement of the issuer company is there. Typically, prices are set beforehand by the issuer company.	Listed shares are traded after they are initially offered in the primary market. There is no involvement of the issuer company. Prices are not set rather it depends on the demand and supply. Stock Exchanges NSE and BSE are part of it.
Similarities	Part of the capital market. Regulated by SEBI.	Part of the capital market. Regulated by SEBI as well.

What is the Primary Market and the Secondary Market in terms of IPO investment?

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