Secondary Market

Secondary Market :

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and listed on the Stock Exchange. Majority of trading is done in the secondary market.

Secondary market comprises of equity markets and the debt markets.

The role of the Secondary Market:
For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit-by facilitating valur enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.

Difference between the Primary Market and Secondary Market

In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading venue in which already existing/pre-issued securities are traded amo0ng investors. Secondary market could be either auction or dealer market.
While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.
Stock Exchange:
Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Exchanges are physical locations, where transactions are carried our on a trading floor. You’ve probably seen pictures of a trading floor, on which traders are wildly throwing their arms up, waving yelling, and signaling to each other. This is a old practice which is now obsolete. The other type of exchange is a virtual kind, composed of a network of computers where trades are made electronically which is widely used every where now.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers. Thus reducing the risk.
The stock markets consist of primary and secondary market. New securities are issued in primary market, Existing securities are traded in secondary market and they are traded through stock exchanges.