A General View At Primary And Secondary Market

A General View At Primary And Secondary Market

A market where investors purchase assets and securities from other investors rather than by issuing companies themselves is called a secondary market .The secondary market is of two types that is OTC and Exchanges .In a secondary market the ETF units are removed two times from the creator and then the participants break up the given units and then use them for performing trade in the secondary market.

By understanding how the secondary markets work is an important aspect to understand the functioning of trade of stocks, bonds, and other securities. Without the understanding of how the secondary markets work ,the capital markets would be much harder to work through and all of it would be less profitable. So it is essential to understand how these markets work and what they are used for and how they differ from primary markets .There are a different number of functions of secondary market .The word market can be used for a number of different things .It denotes both primary and secondary market .These both are not the same and they both differ from each other.

Difference Between Primary And Secondary Market :

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The primary market is a market in which the securities are created.In this market,  a firm sells new stocks to the public. An IPO is a common example of a primary market. These trades are the main key for helping the investors to buy new securities from the bank .An IPO occurs when a private company trades stock with the public for its first time .This gives investors the opportunity to contribute their capital to a company by selling their stock .A company’s equity capital comprises of the funds that are generated by the sale of its stock on the primary market.

Whereas secondary market is a market where the investors purchase assets and securities from other investors rather than by issuing the companies .A secondary market is divided into further types which are OTC market ,Exchanges ,Auction market and Dealer market .There are a wide number of advantages and features of the secondary market .Some of which are ,The stock price of these markets help to evaluate and determine a company .It is very easy for any investor to sell and buy in these markets .Performing a trade in these markets does not require the investor to use a large amount and this helps in encouraging the small investors to grow and hence further flourishes the market .These are some of the main objectives of Secondary market.

What Is Sebi And How It Functions:

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The security and exchange board of India abbreviated as SEBI acts as a regulatory body of the security market in India .It is established and owned by the government of India .It was established to regulate the security market in India .SEBI was established to keep a security check on any unfair practices and to keep the investors safe from such practices .

It checks the price manipulation that is taking place and it bans the Insider trading from taking place and helps to stop any unfair trade practices that may spoil the traders .It helps in the promotion of a fair and just system in the security market .It helps to establish understanding among the investors and the trading options which helps them in better and more suitable investments and trades .