Primary and Secondary Market

Primary and Secondary Market

The financial market is a world where new securities are issued to the public regularly. It is a world full of varied financial products and services, tailored to the need of every individual from all income brackets. These financial products are bought and sold on the capital market, which is divided into the primary market and secondary market.

This post will be a detailed explanation of primary market and secondary market and will draw the distinction of primary market vs. the secondary market.

Definition of Primary Market

The primary market is also known as the new issues market. It deals with new securities being issued for the first time. The essential function of a primary market is to facilitate the transfer of investible funds from savers to entrepreneurs seeking to establish new enterprises or to expand existing ones through the issue of securities for the first time. The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits. Funds raised may be for setting up new projects, expansion, diversification, modernisation of existing projects, mergers and takeovers etc. Methods of Floatation There are various methods of floating new issues in the primary market :

1. Offer through Prospectus: Offer through prospectus is the most popular method of raising funds by public companies in the primary market. This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines. The issues may be underwritten and also are required to be listed on at least one stock exchange. The contents of the prospectus have to be in accordance 2015-16(21/01/2015) FINANCIAL MARKET 275 with the provisions of the Companies Act and SEBI disclosure and investor protection guidelines.

2. Offer for Sale: Under this method securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers. In this case, a company sells securities enbloc at an agreed price to brokers who, in turn, resell them to the investing public.

3. Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory and nonmandatory expenses. Some companies, therefore, cannot afford a public issue and choose to use private placement.

4. Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ‘right’ to buy new shares in proportion to the number of shares they already possess.

5. e-IPOs: A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company. The issuer company should also appoint a registrar to the issue having electronic connectivity with the exchange. The issuer company can apply for listing of its securities on any exchange other than the exchange through which it has offered its securities. The lead manager coordinates all the activities amongst intermediaries connected with the issue.

Functions of primary market

To understand the primary market definition in depth, let’s also discuss the functions of primary market. The general function of primary market is to channelize funds in to industrial enterprises. There are three functions of primary market which are given below –

This is to ensure that it warrants the backing of the issue houses in the sense of lending their name to the  company. Thus, give the issue the stamp of respectability. It shows company is strong, has good market prospects and is worthy of stock exchange quotation.

In the process of origination the sponsoring institutions render, as a second function, some service of an advisory nature which goes to improve the quality of capital issues. These services include advice on such aspects of capital issues as:

(i) determination of the class of securities that are going to issue and price of the issues in the light of market conditions”

(ii) the timing and magnitude of issues,

(iii) methods of flotation, and

(iv) technique of selling, and so on market.

2. Underwriting

In order to get the success of the issue, underwriters came into role. They guarantee the selling of the issue in case it is not subscribe by public. Hence eliminates the risk of uncertainty. Underwriting service is significant for both company as well as public. Company gets money and public get free of over stress.

3. Distribution

The sale of securities to the ultimate investors is known as distribution. It is a specialist job which is performed by brokers and dealers in securities. They maintain direct and regular contact with the direct investors.

Initial Public Offering (IPO)

Initial Public Offer (IPO) is a process through which an unlisted Company can be listed on the stock exchange by offering its securities to the public in the primary market. The object of an IPO may be relating to expansion of existing activities of the Company or setting up of new projects or any other object as may be specified by the Company in its offer document or just to get its existing equity shares listed by diluting the stake of existing equity shareholders through offer for sale.

New Listing

New Listing is a process through which a company which is already listed on other stock exchange/s approaches the Exchange for listing of its equity shares. The companies fulfilling the eligibility criteria prescribed by the Exchange; from time to time; are listed on the Exchange.

An applicant who desires listing of its securities with NSE must fulfill the following pre-requisites:

For Initial Public Offerings (IPOs)

Qualifications for listing Initial Public Offerings (IPO) are as below:

i.                        Paid up Capital

The paid up equity capital of the applicant shall not be less than  10 crores * and the capitalisation of the applicant's equity shall not be less than  25 crores**

* Explanation 1

For this purpose, the post issue paid up equity capital for which listing is sought shall be taken into account.

** Explanation 2

For this purpose, capitalisation will be the product of the issue price and the post issue number of equity shares. In respect of the requirement of paid-up capital and market capitalisation, the issuers shall be required to include, in the disclaimer clause of the Exchange required to put in the offer document, that in the event of the market capitalisation (Product of issue price and the post issue number of shares) requirement of the Exchange not being met, the securities would not be listed on the Exchange.

ii.            Conditions Precedent to Listing:

The Issuer shall have adhered to conditions precedent to listing as emerging from inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.

iii.            Atleast three years track record of either:

·         the applicant seeking listing; or

·         the promoters****/promoting company, incorporated in or outside India or

·         Partnership firm and subsequently converted into a Company (not in existence as a Company for three years) and approaches the Exchange for listing. The Company subsequently formed would be considered for listing only on fulfillment of conditions stipulated by SEBI in this regard.

For this purpose, the applicant or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following:

The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).

·         The net worth of the company has not been wiped out by the accumulated losses resulting in a negative net worth. (Provided this criteria shall not be applicable to companies whose proposed issue size is not less than Rs.500 crores)

·         The company has not received any winding up petition admitted by a court.

****Promoters mean one or more persons with minimum 3 years of experience of each of them in the same line of business and shall be holding at least 20% of the post issue equity share capital individually or severally.

iv.                 The applicant desirous of listing its securities should satisfy the exchange on the following:

·         No disciplinary action by other stock exchanges and regulatory authorities in past three years

There shall be no material regulatory or disciplinary action by a stock exchange or regulatory authority in the past three years against the applicant company. In respect of promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) of the applicant company, there shall be no material regulatory or disciplinary action by a stock exchange or regulatory authority in the past one year.

·         Redressal Mechanism of Investor grievance

The points of consideration are:

    i.            The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances

         ii.      The applicant's arrangements envisaged are in place for servicing its investor.

       iii.      The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection

       iv.      defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company's application for listing. The auditor's certificate shall also be obtained in this regard. In case of defaults in such payments the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.

·         Distribution of shareholding

The applicant's/promoting company(ies) shareholding pattern on March 31 of last three calendar years separately showing promoters and other groups' shareholding pattern should be as per the regulatory requirements.

·         Details of Litigation

The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years period need to be clarified to the exchange.

·         Track Record of Director(s) of the Company

In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc.

Note:
a) In case a company approaches the Exchange for listing within six months of an IPO, the securities may be considered as eligible for listing if they were otherwise eligible for listing at the time of the IPO. If the company approaches the Exchange for listing after six months of an IPO, the norms for existing listed companies may be applied and market capitalisation be computed based on the period from the IPO to the time of listing.

For Securities of Existing Companies

i.                        Net Worth

·         The net worth of the applicant company shall be more than 100 crores* in each of the three preceding financial years. The Company shall submit a certificate from the statutory auditors in respect of networth as stipulated above*.

* Explanation 1 Networth means Paid up equity capital + Free Reserves i.e. reserve, the utilization of which is not restricted in any manner may be taken into consideration excluding revaluation reserves – Miscellaneous Expenses not written off – Balance in profit and loss account to the extent not set off.

ii.                        Conditions Precedent to Listing:

·         The applicant company shall have adhered to conditions precedent to listing as emerging from inter-alia, Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.

AND 

·         The company should have a full time Company Secretary.

iii.                        Atleast three years track record of either: 

·         The applicant company seeking listing; or

·         The promoters****/promoting company, incorporated in or outside India

OR
For this purpose, the applicant company or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following:
 The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR)

·         The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth.

·         The company has not received any winding up petition admitted by a court.

**** Promoters mean one or more persons with minimum 3 years of experience of each of them in the same line of business and shall be holding at least 20% of the post issue equity share capital individually or severally.

iv.                        The applicant company should have been listed on any other recognized Stock Exchange Listed for atleast last three years or listed on the exchange having nationwide trading terminals for at least one year.

·         Minimum average daily turnover during last 6 months (value) - Rs. 10 lakhs

·         Minimum average daily number of trades during last 6 months (count) – 50

·         Cooling period of two months from the date the security has come out of trade-to-trade category on other exchanges where the security has been actively listed.

·         Securities of the company should be trading above face value during six months preceding the date of application.

v.                        The applicant company has paid dividend in at least 2 out of last 3 financial years immediately preceding the year in which listing application has been made

The applicant company desirous of listing its securities should also satisfy the Exchange on the following:

No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years

The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) have not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past and has not been proceeded against by SEBI or other regulatory authorities in connection with investor related issues or otherwise.

Redressal mechanism of Investor grievance

The points of consideration are:

·         The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances

·         The applicant’s arrangements envisaged are in place for servicing its investor

·         The applicant company, promoters’/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection

·         Defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments, the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.

·         Mandatory SEBI registered SCORES ID. Pending investor grievance should not be more than 30 days.

Distribution of shareholding

·         The applicant company/promoting company(ies) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements. Total number of public shareholders on the date of application should be at least 1000.

Details of Litigation

·         The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years need to be clarified to the exchange.

Track Record of Director(s) of the Company

·         In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes.

Change in Control of a Company/Utilisation of funds raised from public

·         In the event of new promoters taking over listed companies which results in change in management and/or companies utilising the funds raised through public issue for the purposes other than those mentioned in the offer document, such companies shall make additional disclosures (as required by the Exchange) with regard to change in control of a company and utilisation of funds raised from public.

Withdrawal\rejection cooling off period

·         The application of the applicant company should not have been rejected in last 6 months.

Company Website

·         The applicant company should mandatorily have functional and updated website.

Audit qualification

·         The applicant company should not have audit qualification w.r.t. going concern and adverse opinion or disclaimer of opinion pertaining to financials.

Note:

Where an unlisted company merges with a company listed on other stock exchanges and the merged entity seeks listing on the NSE, the Exchange may grant listing to the merged entity only if the listed company (prior to the merger with the unlisted company) meets all the criteria for listing on its own account or the unlisted company meets the requirements for listing on the Exchange, except for the market capitalisation condition, on its own account. In case either of the above conditions are not met then such company may be considered for listing after a minimum period of 18 months or more or after the publication of two annual reports whichever is later, provided it satisfies the criteria at that point of time.

The eligibility criteria shall not be applicable to State or Central Public Sector Undertakings (PSU) including PSU Banks.

Kindly note that the application submitted to the Exchange for listing does not construe NSE's listing approval. The company shall use NSE’s reference regarding listing only after the Exchange grants listing approval to the company.

The above criteria is applicable w.e.f March 10, 2017.

For Companies exclusively listed on exiting(RSEs)

Pursuant to the Exchange’s circular no. 216/2017 dated March 09, 2017, the diluted eligibility criteria for listing companies exclusively listed on de-recognised/non-operational stock exchanges is as follows:

i.                        Paid up Capital & Net Worth

·         The paid-up equity capital of the applicant company shall not be less than 10 crores* in each of the three preceding financial years* 

AND

The net worth of the applicant company shall not be less than 10 crores** in each of the three preceding financial years*

* Explanation 1

For this purpose the existing paid up equity capital as well as the paid up equity capital after the proposed issue for which listing is sought shall be taken into account.

** Explanation 2

Networth means Paid up equity capital + Free Reserves i.e. reserve, the utilization of which is not restricted in any manner may be taken into consideration excluding revaluation reserves – Miscellaneous Expenses not written off – Balance in profit and loss account to the extent not set off. 

ii.                        Atleast three years track record of either: 

·         The applicant company seeking listing; or

·         The promoters***/promoting company, incorporated in or outside India

OR

For this purpose, the applicant company or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following:
The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR)

·         The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth.

·         The company has not received any winding up petition admitted by a court.

*** Promoters mean one or more persons with minimum 3 years of experience of each of them in the same line of business and shall be holding at least 20% of the post issue equity share capital individually or severally.

iii.                        The applicant company has paid dividend in at least 2 out of last 3 financial years immediately preceding the year in which listing application has been made

iv.                        The applicant company desirous of listing its securities should also satisfy the Exchange on the following:

No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years

The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) have not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past and has not been proceeded against by SEBI or other regulatory authorities in connection with investor related issues or otherwise.

Redressal mechanism of Investor grievance

The points of consideration are:

·         The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances

·         The applicant’s arrangements envisaged are in place for servicing its investor

·         The applicant company, promoters’/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection

·         Defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments, the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.

·         Mandatory SEBI registered SCORES ID. Pending investor grievance should not be more than 30 days.

Distribution of shareholding

·         The applicant company/promoting company(ies) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements. Total number of public shareholders on the date of application should be at least 500.

·         100% promoter holding and 50% of public holding should be in compulsory demat mode.

Details of Litigation

·         The applicant company, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years need to be clarified to the exchange.

Track Record of Director(s) of the Company

·         In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes.

Change in Control of a Company/Utilisation of funds raised from public

·         In the event of new promoters taking over listed companies which results in change in management and/or companies utilising the funds raised through public issue for the purposes other than those mentioned in the offer document, such companies shall make additional disclosures (as required by the Exchange) with regard to change in control of a company and utilisation of funds raised from public.

Withdrawal\rejection cooling off period

·         The application of the applicant company should not have been rejected in last 6 months.

Company Website

·         The applicant company should mandatorily have functional and updated website.

Audit qualification

·         The applicant company should not have audit qualification w.r.t. going concern and adverse opinion or disclaimer of opinion pertaining to financials.

The listing fee applicable from April 01, 2018 is as follows:

·         A. Listing Fee Structure based on Paid up Capital:

Particulars	Amount
Initial Listing Fees	50,000
Annual Listing Fees (on equity share, bond and/ or debenture capital)
Upto 100 crore	2,90,000
Above 100 Crore and upto 200 Crore	3,80,000
Above 200 Crore and upto 300 Crore	4,90,000
Above 300 Crore and upto 400 Crore	5,95,000
Above 400 Crore and upto 500 Crore	7,30,000

Companies which have a paid up capital, bond and/or debenture and/or debt capital, etc. of more than 500 crore will pay minimum fees of 7,35,000/- and an additional listing fees of 4,800/- for every increase of 5 crore or part thereof in the paid up share, bond and/debenture and/or debt capital, etc.

Companies which have a paid up share, bond and /or debenture and/or debt capital etc. of more than 1,000 crore will pay minimum fees of  12,20,000/- and an additional listing fees of 5,125/- for every increase of 5 crore or part thereof in the paid up share, bond and/debenture and/or debt capital, etc.

And

B. Fee structure based on Market Capitalisation

1.       Incremental Fee shall be levied for listed companies with market capitalization above 2500 crores as follows - 4000 per 1000 Crores

2.       The incremental fee due to market capitalization is capped at 15 lakhs (excluding the component towards paid up capital)

3.       For the purpose of this computation, Market Capitalization shall be deduced as follows:

i.            Monthly average market capitalization = Average of Highest market capitalization during the month and Lowest market capitalization during the month

ii.            Average of the above for the twelve months period preceding the invoicing date i.e. from April 1, XXXX to March 31, XXXX.

 

Definition of Secondary Market

The secondary market is a type of capital market where existing shares, debentures, bonds, options, commercial papers, treasury bills, etc. of the corporates are traded amongst investors. The secondary market can either be an auction market where trading of securities is done through the stock exchange or a dealer market, popularly known as Over The Counter where trading is done without using the platform of the stock exchange.

The securities are firstly offered in the primary market to the general public for a subscription where the company receives the money from the investors and the investors get the securities; thereafter they are listed on the stock exchange for the purpose of trading. These stock exchanges are the secondary market where maximum trading of the company is done. The top two stock exchanges of India are Bombay Stock Exchange and National Stock Exchange.

An investor can trade in securities through the stock exchange with the help of brokers who provide assistance to their client for purchasing and selling. The brokers are the registered members of the recognised stock exchange in which the investor is trading his / her securities. The brokers are allowed to trade on the advanced trading system. The SEBI issues a certificate of registration to the member brokers through which an investor can identify whether a broker is registered or not.

Some of the Important Functions of Secondary Market are listed below:

1. Economic Barometer: A stock exchange is a reliable barometer to measure the economic condition of a country. Every major change in country and economy is reflected in the prices of shares. The rise or fall in the share prices indicates the boom or recession cycle of the economy. Stock exchange is also known as a pulse of economy or economic mirror which reflects the economic conditions of a country.

2. Pricing of Securities: The stock market helps to value the securities on the basis of demand and supply factors. The securities of profitable and growth oriented companies are valued higher as there is more demand for such securities. The valuation of securities is useful for investors, government and creditors. The investors can know the value of their investment, the creditors can value the creditworthiness and government can impose taxes on value of securities.

3. Safety of Transactions: In stock market only the listed securities are traded and stock exchange authorities include the companies names in the trade list only after verifying the soundness of company. The companies which are listed they also have to operate within the strict rules and regulations. This ensures safety of dealing through stock exchange.

4. Contributes to Economic Growth: In stock exchange securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth.

5. Spreading of Equity Cult: Stock exchange encourages people to invest in ownership securities by regulating new issues, better trading practices and by educating public about investment.

6. Providing Scope for Speculation: To ensure liquidity and demand of supply of securities the stock exchange permits healthy speculation of securities.

7. Liquidity: The main function of stock market is to provide ready market for sale and purchase of securities. The presence of stock exchange market gives assurance to investors that their investment can be converted into cash whenever they want. The investors can invest in long term investment projects without any hesitation, as because of stock exchange they can convert long term investment into short term and medium term.

8. Better Allocation of Capital: The shares of profit making companies are quoted at higher prices and are actively traded so such companies can easily raise fresh capital from stock market. The general public hesitates to invest in securities of loss making companies. So stock exchange facilitates allocation of investor’s fund to profitable channels.

9. Promotes the Habits of Savings and Investment: The stock market offers attractive opportunities of investment in various securities. These attractive opportunities encourage people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc.

Comparison Chart

BASIS FOR COMPARISON	PRIMARY MARKET	SECONDARY MARKET
Meaning	The market place for new shares is called primary market.	The place where formerly issued securities are traded is known as Secondary Market.
Another name	New Issue Market (NIM)	After Market
Type of Purchasing	Direct	Indirect
Financing	It supplies funds to budding enterprises and also to existing companies for expansion and diversification.	It does not provide funding to companies.
How many times a security can be sold?	Only once	Multiple times
Buying and Selling between	Company and Investors	Investors
Who will gain the amount on the sale of shares?	Company	Investors
Intermediary	Underwriters	Brokers
Price	Fixed price	Fluctuates, depends on the demand and supply force
Organizational difference	Not rooted to any specific spot or geographical location.	It has physical existence

Key Differences Between Primary Market and Secondary Market

The points given below are noteworthy, as far as the difference between primary market and secondary market is concerned:

1.                   The securities are formerly issued in a market known as Primary Market, which is then listed on a recognised stock exchange for trading, which is known as a secondary market.

2.                   The prices in the primary market are fixed while the prices vary in the secondary market depending upon the demand and supply of the securities traded.

3.                   Primary market provides financing to new companies and also to old companies for their expansion and diversification. On the contrary, secondary market does not provide financing to companies, as they are not involved in the transaction.

4.                   At the primary market, the investor can purchase shares directly from the company. Unlike Secondary Market, when investors buy and sell the stocks and bonds among themselves.

5.                   Investment bankers do the selling of securities in case of Primary Market. Conversely, brokers act as intermediaries while trading is done in the secondary market.

6.                   In the primary market, security can be sold only once, whereas it can be done an infinite number of times in case of a secondary market.

7.                   The amount received from the securities are income of the company, but same is the income of investors when it is the case of a secondary market.

8.                   The primary market is rooted in a particular place and has no geographical presence, as it has no organisational setup. Conversely, the Secondary market is present physically, as stock exchnage, which is situated in a particular geographical area.