What are Primary and Secondary markets? Explain the Principal steps in

Question

What are Primary and Secondary markets? Explain the Principal steps involved in floating a Public Issue and discuss the SEBI guidelines for floating Initial Public Offering (IPO) with help of a care example.

31 Mar 2022

Answer :

Word Count : 755

Primary and Secondary Markets:

The primary market and secondary market are components of the financial market where financial instruments like stocks and bonds are traded.

1. Primary Market:
- *Definition:* The primary market is where new securities are issued for the first time. It is the market for the creation and sale of new securities. In this market, companies raise capital by issuing new stocks or bonds directly to investors.
- *Participants:* The key participants in the primary market include issuers (companies), investment banks, and investors.
- *Purpose:* Companies use the primary market to raise funds for expansion, debt repayment, or other corporate purposes. The process of issuing new securities to the public for the first time is known as an Initial Public Offering (IPO).

2. Secondary Market:
- *Definition:* The secondary market is where existing securities are bought and sold among investors. It is often referred to as the stock market or the stock exchange.
- *Participants:* In the secondary market, investors buy and sell securities amongst themselves without the involvement of the issuing company.
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