Primary Market

The primary market is where securities are issued for the first time by companies or governments to raise capital. It is also known as the new issue market. In the primary market, businesses sell their stocks, bonds, or other financial instruments directly to investors. These offerings provide companies with the capital they need for expansion, research and development, debt repayment, or other purposes.

Features of the Primary Market

• New Issuance: Securities are offered to the public for the first time.
• Direct Transaction: Issuers sell securities directly to investors.
• Pricing: Prices are set by the issuer based on company valuation and market conditions.
• Regulation: Primary market activities are regulated to protect investors' interests.
• Capital Formation: Companies raise funds through the sale of securities.

Participants in the Primary Market

The key participants in the primary market include issuers (companies or governments seeking capital), underwriters (investment banks that facilitate the issuance process), and investors (individuals or institutions looking to invest in new securities).

In conclusion, the primary market plays a crucial role in enabling companies to raise funds for growth and development while providing investment opportunities for individuals and institutions.