Primary Market

The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Primary markets create long term instruments through which corporate entities borrow from capital market.

Features of primary markets are:

  • This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
  • In a primary issue, the securities are issued by the company directly to investors.
  • The company receives the money and issues new security certificates to the investors.
  • Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.
  • The primary market performs the crucial function of facilitating capital formation in the economy.
  • The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."
  • The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

  • Public issuance, including initial public offering;
  • Rights issue (for existing companies);
  • Preferential issue.

Other articles related to "market, primary market, markets, primary markets":

Market Segmentation Index - Definition
... The degree of market segmentation is defined as the degree of monopoly power of the producing firm or exporting country ... the average unit value (AUV) of the same product sold in the primary market compared to the benchmark market, the greater the degree of monopoly power in that market ... extrapolated from the Lerner Index of market power in the form L=(P-MC)/P in the case of multiple market segments ...
Levels of Securities Market - Primary Market
... The primary market is that part of the capital markets that deals with the issue of new securities ... Primary markets creates long term instruments through which corporate entities borrow from capital market ... Features of primary markets are This is the market for new long term equity capital ...
NFL On Television - Blackout Policies - No Opposing Games
... opposite the local club's broadcast on the primary market's affiliate due to NFL rules ... shows the doubleheader) may only air one game in that market either early or late (the slot which the local club is not playing) ... Each TV market, including one hosting a game that is not sold out, is assured of at least one televised game in the early and late time slots, one game on each network, but no network doubleheader ...
ICMA - Market Practice – Rules, Recommendations and Standard Documentation
... All ICMA members have access to the ICMA Primary Market Handbook (IPMA Handbook), ICMA’s rules and recommendations for the secondary market and the legal ... Primary market The ICMA Primary Market Handbook (IPMA Handbook) is a comprehensive document covering the issuance of a broad range of international securities, continuously responding to market ... It is the most widely used issuing framework in the international debt markets worldwide ...

Famous quotes containing the words market and/or primary:

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