Primary capital market and Secondary capital market
Primary Capital Markets
When a company publicly sells new stocks and bonds for the first time, it does so in the primary capital market. This market is also called the new issues market. In many cases, the new issue takes the form of an initial public offering (IPO). When investors purchase securities on the primary capital market, the company that offers the securities hires an underwriting firm to review it and create a prospectus outlining the price and other details of the securities to be issued.
All issues on the primary market are subject to strict regulation. Companies must file statements with the Securities and Exchange Commission (SEC) and other securities agencies and must wait until their filings are approved before they can go public. However, there is growing popularity among companies wishing to raise money in the capital markets via an IPO arrangement called a SPAC (Special Purpose Acquisition Company). The main advantage of a SPAC is that a company has far fewer regulatory requirements and can go "public" in a matter of months.
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