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An Introduction to Trading in the Financial Markets: Market Basics by R. Tee Williams

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1

The Primary Market

The primary market is where securities get created. Unlike the secondary markets described next, primary markets raise money on behalf of companies or governments. Figure 3.1 shows the purpose of the primary market.

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Figure 3.1 The primary market allows investment banks to acquire new securities from nonfinancial companies, governments, and others and sell them onward to traders and investors.

There are a number of different processes that can be used to raise capital in the primary market. These processes are explored in Book 2, An Introduction to Trading in the Financial Markets: Trading, Markets, Instruments, and Processes, ...

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