The difference between primary market and secondary market
1. The Primary market refers to the market where new securities are issued by the company that wishes to obtain capital and is sold directly to the investor while the secondary market refers to the market where securities that have already been issued are traded. Instruments that are usually traded on the secondary market include stocks, bonds, options and futures.
2. In the primary market, the company is directly involved in the transaction, whereas in the secondary market, the company has no involvement since the transactions occur between investors.
3. The primary markets deal with new securities, that is, securities, which were not previously available and are, therefore, offered to the investing public for the first time while the secondary market is a market for already issued securities.
4. Primary market provides additional funds to the issuing companies either for starting a new enterprise or for the expansion or diversification of the existing business.On the other hand, the secondary market can in no circumstance supply additional funds since the company is not involved in the transaction.
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