Friday, July 28th 2017

Primary Market

Primary Market Meaning:
In stock market terminology, the term Primary Market refers to the first market where securities are made available through an underwriter. They are traded on the Primary Market before being traded on an exchange or over-the-counter.

Primary Market Example:
For example, a Primary Market for stocks and bonds would usually be made by the original underwriter of the securities. The underwriter consists of the financial institutions which have assumed the initial risk in bringing the securities out to the public through special offerings to their clients. Initial Public Offerings are a good example of how an underwriter would use the Primary Market before offering the stocks for trading on an exchange. Generally, only people with an account at an investment bank will be allowed to purchase securities on the Primary Market. Bonds are also first offered to the customers of investment banking firms before being released to the public at large.

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