Difference Between Primary Market And Secondary Market
The main dissimilarities or difference between primary and secondary market can be described as follows:
1. Introduction
Primary Market: A form of capital market where newly issued securities (shares, debentures, bonds etc.) are traded between the issuing firm and investors.
Secondary Market: A form of capital market where existing securities (previously issued) are traded between investors.
2. Related To
Primary Market: It is related to fresh or new financial instruments.
Secondary Market: It is related to existing or already issued financial instruments.
3. Price Of Securities
Primary Market: Securities are sold at a fixed price
Secondary Market: Price is determined by demand and supply of securities.
4. Intermediaries/Agents Involved
Primary Market: Underwriters and investment bankers are involved in trading of new securities.
Secondary Market: Trading activities are performed through brokers.
5. Trading Frequency
Primary Market: Securities are issued only once by the company
Secondary Market: Securities are traded several times in the secondary market.
6. Trading Between
Primary Market: Securities are traded (bought and sold) between issuing company and investors.
Secondary Market: Securities are traded between investors
Also Read:
Also Read:
7. Fixed Location
Primary Market: No fixed geographical location
Secondary Market: It has fixed geographical location
8. Benefit To
Primary Market: Company
Secondary Market: Investors
Primary Market Vs Secondary Market (Comparison Chart)
I hope this post is helpful to understand the difference between primary market and secondary market and to make comparison between them.
Primary Market Vs Secondary Market (Comparison Chart)
Basis
|
Primary Market
|
Secondary
|
Introduction
|
Trading of newly issued financial securities
|
Trading of previously issued or existing securities
|
Related To
|
Fresh securities
|
Already issued securities
|
Securities Price
|
Fixed
|
According to the demand and supply of securities
|
Agents/Intermediaries
|
Investment Bankers
|
Brokers
|
Frequency Of Trading
|
Only once
|
Several times
|
Trading Between
|
Company and investors
|
Investors
|
Location
|
Not fixed
|
Fixed
|
Beneficial For
|
Issuing company
|
Investors
|
I hope this post is helpful to understand the difference between primary market and secondary market and to make comparison between them.
