​KembaraXtra–Islamic Finance–Islamic Capital Market – Introduction (Primary and Secondary Markets)
• Financial markets are generally characterised by the existence of primary markets.
• Financial markets do not always necessarily include secondary markets.
• In the context of savings deposits, a primary market always exists.
• However, savings deposits cannot be sold or transferred by deposit holders.
• Financial instruments that are marketable give rise to the existence of secondary markets.
• Securities that can be bought and sold after issuance contribute to secondary market formation.
• Listed equities are marketable financial instruments.
• As a result, equity markets consist of both primary and secondary markets.
• Newly formed equities are issued in the primary equity market.
• The primary market facilitates the initial issuance of securities to investors.
• Secondary markets act as platforms for trading existing securities after initial issuance.
• Securities traded in secondary markets do not provide direct funding to issuing companies.
• Issuing companies receive funds only at the primary market stage.
• The amount of funding received by issuing companies depends on the number of shares issued and their issue price.
• Primary and secondary markets together ensure capital formation and liquidity in financial markets.
• The operational mechanisms of both primary and secondary markets are explained in the subsequent section.