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Primary Market

Updated on March 7, 2023

Primary market is the market where securities are sold to the investors for the first time. It is a medium through which companies, institutions or even governments can raise capital by issuing securities on exchanges. In a primary market, securities such as stocks, bonds, notes or bills can be issued. The most common type of fund raising happens in a primary market in the form of an IPO, where a company offers its shares to the public for the first time.

Primary Market explained

The primary market is also called ‘New Issue Market’. When companies come to the markets for their financing needs, they first issue securities through the primary markets. The money raised through the primary market might be utilized for business expansion, new market development and diversification.

Features of Primary Markets

Some features of Primary Markets are:
a) All the proceeds from issuance of securities go to the issuer in primary market
b) Issuer fixes the price in primary markets
c) The issue is governed by the regulator
d) Once the process of issuance is completed in the primary market, further trading takes place in the Secondary market.
e) ETFs, FPOs, Rights Issue, Bonus Issue, QIPs etc are offered through Primary markets