The Secondary Market is where already issued securities are traded among investors after their initial sale in the primary market. It provides a continuous platform for buying and selling, ensuring liquidity, transferability, and transparent price discovery. This market is essential because it allows investors to convert their investments into cash at any time and enables new participants to enter easily.
🔄 Process & Flow
- Securities issued in the primary market are listed on stock exchanges like NSE and BSE.
- Investors place buy and sell orders through brokers or online platforms.
- The exchange’s system matches orders electronically to complete trades.
- Clearing corporations ensure settlement by transferring securities to buyers and funds to sellers.
📌 Key Aspects
- Purpose – Facilitates liquidity, price discovery, and investor participation.
- Types of Market – Organized exchanges (NSE, BSE) and Over-the-Counter (OTC).
- Participants – Buyers, sellers, brokers, institutional investors.
- Pricing – Determined by demand and supply dynamics.
- Regulation – Controlled by SEBI and exchanges through trading/settlement norms.
- Funds Flow – From buyer → to seller (company not involved).
- Example – Buying Infosys shares on NSE after its IPO listing.