Secondary market is place for sale and buy of existing securities. You can adjust your holdings of securities. And also you can change your opinion based on risk and return. Therefore you can sell securities for cash to meet your needs. Because, it provide platform for trading of securities. And it is also for intermediaries who assist in trading. So securities are traded are cleared and settled. You can check secondary market examples.
What is Secondary Market
Secondary market also known as aftermarket. This means for any assets or goods are not new. Such as bond and stocks are bought and sold. You have to sell to other investors. However, you have to trade securities after initially offered. To public in primary market or listed on stock exchange. Therefore majority of trading done in secondary market.
However, secondary market contain of equity markets and debt markets. Probably, company issued securities for first time is open to public in primary market. Once Initial public offer is done and stock is listed. They are traded in secondary market. You can read function of Secondary market.
You can find difference between two primary and secondary. Therefore, you get securities directly from company through IPOs. But in secondary market you have to buy from other investor. This means other investor willing to sell same to you. Hence, there are some of key products available in secondary market. Such as Equity shares, bonds, preference shares, treasury bills and debentures.
Functions of Secondary Market
You will get regular information about price of securities. And it also helps to observe price of bonds and interest rates. It also offers liquidity to your asset. But secondary market brings parties together. Therefore you can keep your cost of transaction low. Check role of secondary market.
However, you can able to buy and sell securities at any time. Because, as stock exchange provides facility for continuous trading. Like shares, bonds, debentures etc. And these markets maintain active trading. So that you can buy or sell immediately at given price.
Therefore it varies from transaction to transaction. It also increases liquidity by continuous trading. You can sell securities in stock exchanges at any time. By your demand and supply security price flow. However, you can trade your securities in liquid secondary market.
And it also encourages investing in initial public offer. That it will help directly to collect new finance. Probably, secondary market can monitor employees, listed firms, clients and other bodies. You can maintain savings and investments. To understand better you can check research on secondary market.
Different Types of Secondary Market
Secondary market is formed by another layer of investor. And it deal with primary market to buy and sell financial securities. Like as bonds, futures and stock. Therefore, you can trade without any involvement with company. Hence, secondary market divided into two kinds of markets. Such as auction market and dealer market.
Auction market is place where buyers and sellers set up in one place. And it also announce rate at which they are willing to sell or buy. Therefore, in public they offer prices either BID or ASK. Since for all buyers and sellers are arrange at same place. Because, you need not see out profit options. However, everything is announced in public. Hence you can make your choice easily.
In Dealer Market no parties will come together. You can buy and sell through electronic networks. Such as fax machines, telephones or order matching machines. However, more dealers operate in this market. And they will provide best offer to you. Therefore, they will give you best price in market. By selling of securities dealer will earn profit.
Difference between Primary and Secondary Market
Primary and Secondary Market are to raise capital fund. You can find that two markets will collect fund. Therefore, both platforms are to raise capital requirement. Probably, in primary market company will involve directly in transactions. Whereas in secondary markets company will not involve in transaction.
However, primary market issue new securities by company. So company will gain capital and it sell directly to investor. For funds share holder give certificate in exchanges. Because, to get interest from company. To understand you need to check advantages and disadvantages of secondary market.
In secondary market you can buy and sell stock to one another. Moreover, these are already been issued by firm. And it also sold to some other on primary market. But when you wished to sell stock on secondary market. See method of secondary market research.
Similarly, on secondary market you need broker to buy securities. And also price of security change with market. Therefore, you need to pay commission to your broker. But volumes of sold securities are differing from day to day. If you want invest in secondary market. You must go to broker or dealer.
Importance of Secondary Market
Secondary market has important role to play behind. Because, to develop capital market. Therefore, it connects you to take partiality for liquidity. And it also maintains your capital for longer period. At same time, you want to know about performance of company. Hence, for many companies secondary market is first step for trading.
Features of Secondary market
You need to take correct information on time. And it must not delay in providing correct trading information. Therefore, you will get plenty of liquidity in trading. Hence, that will happens if number of buyers and sellers are more in market.
However, your transaction must be capable to manage. And you will receive low cost for your transactions. Hence you will get attract with traders. Probably, new information must reveal in proper time.
Finally, you must not buy securities on desire. You need to check for opportunities to buy security. And you have to look at basic info of security before taking decision. However, these financial saving and profit always in opposite directions. Therefore, pricing in secondary market is entirely different.