Secondary Market Meaning

The ‘Secondary Market’ is nothing but the Stock Market, where people can buy or sell shares they own.

It’s called ‘Secondary Market’ because shares are first created and distributed to the public in the ‘Primary Market’ through IPO (Initial Public Offering).

After the initial distribution of shares from the company to the public, the transactions then happen in the ‘Secondary Market’ where the company is not directly involved.

For example, if you want to buy some shares of HDFC Bank from NSE or BSE, you are buying it from another investor who owns the shares. HDFC Bank is not directly involved in the transaction.

However, if an investor bought shares of ‘HDFC Bank’ in the IPO (i.e Primary Market), the shares would be received directly from the company.

Apart from stocks, the secondary market has bonds, preference shares, debentures etc.

The SEBI (Securities and Exchange Board of India) is the regulator of the secondary market.

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