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Primary market

Where a newly issued security is first offered. All subsequent trading of this security occurs is done in the secondary market.

primary market

The market in which new, as opposed to existing, securities are sold. Investors who purchase shares in a new security issue are purchasing them in the primary market. Investors who buy stocks and bonds in the primary market usually are not required to pay brokerage commissions because fees for selling the issue are built into its price and are absorbed by the issuer. Also called new issue market. Compare secondary market.

Primary Market

The first group of investors to whom a new issue of a security is sold. The primary market consists of the issuer and the first buyers of the issue. All subsequent trading takes place on the secondary market. Underwriting is the process by which the primary market functions, that is, how issues are sold to the primary buyers. The primary market can at times be more volatile than the secondary market because it is difficult to determine the underlying value of new issues. In any case, the primary market accounts for only a portion of trade on a given trading day. See also: Rights issue, Preferential issue, Initial public offering.

Primary market. If you buy stocks or bonds when they are initially offered for sale, and the money you spend goes to the issuer, you are buying in the primary market.

In contrast, if you buy a security at some point after issue, and the amount you pay goes to an investor who is selling the security, you're buying in the secondary market.

The term primary market also applies the leading or main markets for trading various products. For example, the New York Stock Exchange (NYSE) is a primary market for stocks.

primary market

Any market in which the original issuer receives money, such as an investment house that purchases all securities for an original issue and then resells them on the stock market. Also called the loan origination market. Contrast with secondary market, where mortgages are pooled and then sold to others.

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