Primary and Secondary Markets

Primary and Secondary Markets

In the medias, many inepties are told about primary and secondary stock markets. When reading that, one can easily imagine that they are different markets even composed of different people.

However, it is not the case.

The primary market simply relates to the fact that the recipient of the proceed of the sale of securities is the issuer itself, the first to have created the security, hence the name of primary market.

On certain certain stock exchanges and markets, the access to the primary market is limited to members who own a seat or to licensed professionals.

The secondary market relates to the fact that the recipient of the proceed of the sale of securities is a shareholder or a creditor of the issuer and not the issuer itself. As he or she was not the first to own the security, he or she is referred to as second, hence the designation of secondary market.

Generally, the secondary market is opened to all, directly or through the intermediary of its members.