Primary Market


DEFINITION of 'Primary Market'

A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors.

Also known as "new issue market" (NIM).


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BREAKING DOWN 'Primary Market'

The primary markets are where investors can get first crack at a new security issuance. The issuing company or group receives cash proceeds from the sale, which is then used to fund operations or expand the business. Exchanges have varying levels of requirements which must be met before a security can be sold.

Once the initial sale is complete, further trading is said to conduct on the secondary market, which is where the bulk of exchange trading occurs each day. Primary markets can see increased volatility over secondary markets because it is difficult to accurately gauge investor demand for a new security until several days of trading have occurred.

  1. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  2. New Issue

    A reference to a security that has been registered, issued and ...
  3. Secondary Market

    A market where investors purchase securities or assets from other ...
  4. Public Offering Price - POP

    The price at which new issues of stock are offered to the public ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Third Market

    Trading by non exchange-member brokers/dealers and institutional ...
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  1. How can I buy shares in the primary market?

    If you want to buy shares in the primary market, you need to either be part of a syndicate or one of the lucky few whose ... Read Full Answer >>
  2. What is the difference between a primary and secondary financial market?

    Primary and second financial markets describe two different types of marketplaces where investors and traders buy and sell ... Read Full Answer >>
  3. Who trades in primary and secondary capital markets?

    Securities are sold on the capital market. Primary and secondary markets for securities trading have different purposes. ... Read Full Answer >>
  4. What's the difference between primary and secondary capital markets?

    The difference between the primary capital market and the secondary capital market is that in the primary market, investors ... Read Full Answer >>
  5. Are secondary capital markets beneficial for society, or are there purely speculative?

    Trading in a secondary market is beneficial to society in various ways. The greatest benefit is that investors in the secondary ... Read Full Answer >>
  6. After an initial public offering, does a company profit from increases in its share ...

    The short answer is "no". To understand why, recall that the stock market is actually comprised of two markets - a primary ... Read Full Answer >>

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