Primary and secondary securities markets are fundamental concepts for any exchange trader. Primary is usually understood as the market through which the transfer of property rights to securities, regardless of their form of issue, from the issuing organization to an investor. The concept of the secondary market is much more complicated, it is characterized by a more complicated system of relations between shareholders, so we should dwell on it in more detail.
So, in modern economic science secondary The securities market is a complex system of relations between holders of securities that are not their issuers in transferring or disposing of ownership of shares previously placed on the primary market. Moreover, as an important characteristic of such a market, it is worth mentioning first of all the possibility of an arbitrarily large number of such transitions - after the issue of securities, the number of their potential resales is unlimited.
In fact, the secondary securities market can be described as a place that serves to maximize the extraction of speculative profit, which is possible only with repeated resale of shares. In the modern economy, both the actual market and the electronic are considered secondary, that is, the form of the transaction in this case does not play a decisive role.
The main actors in the secondary market are, as a rule, brokers. Most often, they manage the funds of the client, selling and buying certain securities, depending on market fluctuations, in order to increase working capital. Decisions on the sale or acquisition are made on the basis of the so-called listing. This is a key concept of the secondary market, which means a set of certain rules that determine the quotes of any shares on the stock exchange. At the same time, the secondary securities market is characterized by the fact that the listing procedure is most often similar for all stock exchanges operating in the territory of one state, which allows issued securities to go through free circulation on other sites after passing through the listing procedure on one of them.
It should be noted that the procedure for listing and assigning specific prices to certain securities is important not only for secondary market players. Almost always, high quotes mean for the issuing company a significant increase in business reputation, which, in turn, to some extent guarantees a gradual increase in prices for any kind of security.
It follows from all of the above that listing is a procedure absolutely necessary for all stock market participants. It gives investors the opportunity to adequately assess the profitability of investing in freely traded securities, allows brokers to better navigate the need for timely acquisition or dumping of shares, and helps issuers gain weight in the business community.
The secondary securities market allows investors who play with it to significantly increase their own profits by sequentially conducting a number of transactions with stocks or bonds, and for issuers it opens up opportunities for additional cash injections into the business while increasing business reputation. At the same time, the volume of this market is much higher than the primary one, which opens brokers with wide opportunities for speculation.
Thus, summing up, we can give a more detailed definition of the secondary market. So, the secondary stock market is an infinite number of transactions on the transfer or alienation of rights to hold shares between investment funds, brokers and other stock market players.