Secondary

Market

Secondary market is the segment of the

capital market where securities (shares
and debentures) that have been
issued/listed in stock exchanges are
bought & sold for either investment or
speculation.

Basis of
Difference
Deals with

Objectives

Primary Market

Secondary Market

Deals with the sale of Deals with the sale and

only new securities
purchase of already
existing securities.
Creating long term
Providing liquidity to these
securities for
instruments/markets by
mobilizing capital
facilitating transactions
equity/debt

Determination of The price of securities

price of
is decided by the
securities
management of the
company (under the
SEBI rules)

The price of securities is

determined by the forces
of demand and supply for
securities.

Basis of
Difference
Location

Administration

Role of
concerned
company

Primary Market

Secondary Market

There is no fixed
The stock market is the
geographical location platform through which
transactions happen
It has no tangible form It has a definite
of administrative
administrative structure
structure
that facilitates trading in
securities
The securities are sold The company does not
directly by the
play a role as the
company to the
securities are exchanged
investors.
among the investors
themselves.

Providing a market place for securities transaction

Imparting liquidity marketability for equity and
debt instruments
Ensuring safe and fair dealing in securities so as to
protect investors interests
Facilitating price discovery
Linking savings and investment, and thereby
facilitating capital formation
Facilitating foreign investment, in particular FIIs
Enforcing market discipline on corporate entities
Facilitating the functioning of Primary market

Stock Exchange
Clearing Corporation
Depositories/ DP
Brokers
Registrar to an Issue and Share Transfer
Agent
Buyers and sellers

The Securities Contracts (Regulation) Act,

1956 defines a stock exchange as
"an association, organization or body of
individuals, whether incorporate or not,
established for the purpose of assisting,
regulating and controlling the business in
buying, selling and dealing in securities".

A Stock exchange or securities market is an

organised market where listed securities are
purchased & sold for investment or
speculation.

A stock exchange is an entity that

provides "trading" facilities for
stock brokers and traders to trade stocks,
bonds, and other securities.
Stock exchanges also provide facilities for
issue and redemption of securities and
other financial instruments, and corporate
events including the payment of income
and dividends.

Securities traded on a stock exchange include

shares issued by companies, bonds, unit trusts
(Mutual Funds), pooled investment products and
derivatives.

It is an organized market
It is a market for financial securities
It is an important constituent of capital market i.e., market
for long-term finance
It is a voluntary association of persons, with restricted
membership
In a stock exchange, only the members can deal engage
in transaction i.e., buy & sell securities
The members of a stock exchange can buy and sell
securities either as brokers for & on behalf of their clients
The dealings in a stock exchange are under certain
accepted code of conduct i.e., rules and regulations

1.
2.
3.

4.
5.
6.
7.
8.
9.

Ready and Continuous Market

Liquidity for securities
Promotes Savings & Capital
Formation
Investor Protection
Government Funding
Evaluation of Securities
Industrial Development
Price stability
Facilitates Flow of Foreign Capital

A)
1.
2.
3.
4.
5.
6.
7.
8.

Advantages to the Investors

Liquidity of investment
Evaluation of securities
Corporate news
Grievance redressal
Higher returns
Investor education
Corporate governance
Stable prices

B) Benefits to companies
1.Publicity and image development
2.Easy raising of large volume of funds
3.Market discipline & corporate governance
4.Sourcing of international funds
5.Facilitates expansion
6.Facilitates mergers and acquisitions

C) Benefits to the economy

1.Business development
2.Savings mobilisation
3.Government funding
4.Capital formation
5.Availability of foreign capital
6.Promotion of industrial democracy
7.Regulation of corporate entities