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Similarities between Primary Secondary Markets

Similarities between Primary Secondary Markets

Similarities between Primary Secondary Markets are follows:

(a) Listing: The securities issued in the primary market are invariably listed on a recognized stock exchange for dealings in them. Further trading in secondary market can also be carried out only via a stock exchange platform. The listing on stock exchanges provides liquidity as well as marketability to the securities and facilitates discovery of prices for them.

(b) Control By Stock Exchanges: Via the mechanism of Listing Agreement between the issuer companies and the stock exchange the stock exchanges exercise considerable control over the new issues as well securities already listed on the stock exchange. Exchanges ensure that there is continuous compliance by the issuer company of the clauses provided in the Listing Agreement

Interrelationship between Primary Markets and Secondary Markets:

The markets for new and old securities are, economically, an integral part of a single market the capital market. Their mutual interdependence from the economic point of view has following two dimensions.

• One, the quantum of trading and the participation of the investors on stock exchange has a significant bearing on the level of activity in the primary market and, therefore, its responses to capital issues.

• Second dimension of the mutual interdependence is the fact that the level of activity in primary market has a direct impact on the level of activity on secondary market. As more and more companies issue their securities in the market investment options for investors increase which leads to a wider participation by investors in the secondary market.

Similarities between Primary Secondary Markets

Participants in Capital Market

• Investors: Investors are the lifeline of any capital markets. For a vibrant capital market the capital market should be capable enough to attract the savings of investors.

Investors belong to various categories such as Retail Investors, Institutional Investors like mutual funds, insurance companies and Foreign Portfolio Investors.

• Stock Exchange:- Stock Exchange is a place where securities issued by issuer companies are listed and traded. The term is  synonymously used for secondary markets.

Similarities between Primary Secondary Markets


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