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Primary market
 
 
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The primary market is that part of the capital market
Capital market

The capital market is the market for security , where Corporation and governments can raise longterm funds. It is a market in which money is lent for periods longer than a year....
s that deals with the issuance of new securities
Security (finance)

A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities , and stock securities; e.g., common stocks....
. Companies, governments or public sector institutions can obtain funding
Funding

Funding or finance is to provide Capital , which means money for a project, a person, a business or any other private or public institutions....
 through the sale of a new stock
STOCK

Software for fixed assets management and stock control developed in 2004. Stocktaking process is carried using a hand-held mobile terminal equipped with barcode reader or RFID technology....
 or bond
Bond (finance)

In finance, a bond is a debt security , in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed Maturity ....
 issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting
Underwriting

Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products ....
. In the case of a new stock issue, this sale is an initial public offering
Initial public offering

Initial public offering , also referred to simply as a "public offering" or "flotation," is when a company issues common stock or Share to the public for the first time....
 (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus
Prospectus

Prospectus may refer to:* Prospectus * Prospectus ...
.

Features of primary markets are:



Methods of issuing securities in the primary market are:










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The primary market is that part of the capital market
Capital market

The capital market is the market for security , where Corporation and governments can raise longterm funds. It is a market in which money is lent for periods longer than a year....
s that deals with the issuance of new securities
Security (finance)

A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities , and stock securities; e.g., common stocks....
. Companies, governments or public sector institutions can obtain funding
Funding

Funding or finance is to provide Capital , which means money for a project, a person, a business or any other private or public institutions....
 through the sale of a new stock
STOCK

Software for fixed assets management and stock control developed in 2004. Stocktaking process is carried using a hand-held mobile terminal equipped with barcode reader or RFID technology....
 or bond
Bond (finance)

In finance, a bond is a debt security , in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed Maturity ....
 issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting
Underwriting

Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products ....
. In the case of a new stock issue, this sale is an initial public offering
Initial public offering

Initial public offering , also referred to simply as a "public offering" or "flotation," is when a company issues common stock or Share to the public for the first time....
 (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus
Prospectus

Prospectus may refer to:* Prospectus * Prospectus ...
.

Features of primary markets are:

  • This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM).
  • In a primary issue, the securities are issued by the company directly to investors.
  • The company receives the money and issues new security certificates to the investors.
  • Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.
  • The primary market performs the crucial function of facilitating capital formation in the economy.
  • The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as ‘going public’.
  • The financial assests sold can only be redeemed by the original holder.


Methods of issuing securities in the primary market are:

  • Initial public offering
    Initial public offering

    Initial public offering , also referred to simply as a "public offering" or "flotation," is when a company issues common stock or Share to the public for the first time....
    ,
  • Rights issue
    Rights issue

    Under a Secondary Market Offering of shares to raise money, a company can opt for a rights issue to raise capital. With the issued rights, existing shareholders have the privilege to buy a specified number of new shares from the firm at a specified price within a specified time....
     (for existing companies), and
  • Preferential issue.


See also

  • Initial public offering
    Initial public offering

    Initial public offering , also referred to simply as a "public offering" or "flotation," is when a company issues common stock or Share to the public for the first time....
  • Investment banking
    Investment banking

    An Investment Bank is a financial institution that deals with raising capital, trading in securities and managing corporate mergers and acquisitions....
  • Secondary market
    Secondary market

    The secondary market, also known as the aftermarket, is the financial markets where previously issued securities and financial instruments such as stocks, bonds, options, and futures are bought and sold.....