Question

What are primary markets? State any two features of the primary market.

Answer 1

Primary markets are that part of capital markets which focuses on issuing new securities or shares issued by companies or issuers to raise capital from capital markets. The process of introducing new securities and identifying a selling price of the shares is conducted by intermediaries like Merchant banks, underwriters, bankers to issue, etc., which are registered with SEBI. SEBI also regulates the primary market. Features of primary markets are :

(i) New securities are issued by companies directly to the investors.

(ii) Companies use primary markets for setting up new ventures or business expansions or modernisation of plans.