​KembaraXtra-Islamic Finance-Islamic Capital Market- Between Primary Market and Secondary Market

Primary Market

• The primary market is where fresh (new) shares or securities are issued.
• It is also known as the new issue market.
• One of the major components of the primary market is the Initial Public Offering (IPO).
• Companies receive the money raised from issuing shares in the primary market.
• Funds raised are used for business expansion and growth purposes.
• Securities are issued at a uniform price for all investors participating in the offering.
• The primary market does not provide liquidity for the securities issued.
• Underwriters act as intermediaries between the company and investors.
• Securities issued in the primary market can be sold only once.


Secondary Market

• The secondary market involves trading of already issued ans existing shares or securities.
• It is also known as the after-issue market.
• The issuing company does not receive any money from secondary market transactions.
• The amount paid by the buyer goes directly to the seller of the shares.
• Securities are exchanged between buyers and sellers.
• Trading is facilitated by stock exchanges.
• The secondary market provides liquidity to securities.
• Brokers act as intermediaries in the secondary market.
• Securities can be sold multiple times, with no restriction on the number of transactions.

One-Line Exam Summary

The primary market deals with the issuance of new securities and capital raising for companies, while the secondary market facilitates trading of existing securities among investors and provides liquidity.