Trading in shares on the stock exchange always involves operations on the two types of markets - primary and secondary.This article is devoted to the analysis of what is meant by the term "primary market" and the answer to the main questions raised by the Cubs in matters of speculation.
So, before you get to the market, any securities must be emissirovany, or, in other words, released and admitted to the free market.Only after the issuer (this term is taken to mean an individual or entity to issue shares) decide on the sale of its own securities, they are able to get on the stock exchange.
Initially, any shares fall on the primary market, that is on the market, where the conclusion of the transaction between the issuer and the investor.Thereafter, all subsequent transactions, regardless of their number are completed already in the secondary market.In order to better understand the characteristics inherent in the primary market, it highlights its main functions in stock trading.
So primary market for:
- release of certain shares or securities firms, issuers;
- initial public offering;
- maintain a balance between supply and demand on the market;
- detailed account of the shares.
In other words, it will not be possible without any sale of securities, as well as search firms investors.It is clear that the major players in this market are automatically only two types of companies: investors purchasing shares and issuers that carry them.But often, in addition to these two subjects of economic activity in the game to enter the primary market and intermediary firms that acquire securities for resale, as well as various investment funds.
This trade in the stock market can be carried out in several ways, depending on the wishes of the issuer.So, it may take the form of commercial or investment tenders, conversion, auction or a private or public subscription.With regard to the latter type of trading on the stock exchange, it is understood by public subscription in the absence of the decision on the beginning of the realization of any securities of any advantages of one over the other potential buyers.Accordingly, in a private offering such benefits can be negotiated.
primary market also implies the complete lack of control over the further fate of the issuer sold their shares.The buyer can either leave them at home to accumulate profits and to implement in order to extract a quick speculative profit.
worth noting that the issuer may not necessarily be any commercial company.Often, in the primary market fall and the shares issued by the state.Most often they are put up for sale large structures (commercial banks, investment funds and so on) that, in order to find the most convenient and secure profit, part of the state has acquired the securities are sold, and are often left in their own assets.
In turn, the state is much more profitable to sell their shares is through large foundations, as those possessing excellent market conditions, are able to create an attractive share the project, ensuring the maximum profit.
Thus, it becomes obvious conclusion that the primary market today - it's a place of direct interaction between the issuer and the buyer, for which there are most often large equity players, has a wide network of brokerage for the further sale of shares.
