SECONDARY MARKETS

CONTENTS

Function of Secondary MarketsTrading LocationsMarket StructuresPerfect Markets

There are actually two levels of the capital markets in which investors participate:

Primary Markets

Secondary Markets

SECONDARY MARKETSecondary market means

market for purchase and sale of second hand securities.

Securities once sold can be resold to others through stock brokers.

Also called After Market.

It is a organized market where securities issued by- Companies, Government, Semi –Government Institutions and Public bodies are traded.

These securities are traded in the stock exchange where they are listed.

Secondary market includes:- Stock exchanges BSE (Sensex) NSE (Nifty)

OTCEI(Over The Counter exchange of India)

SHCIL (Stock Holding Corporation India ltd)

LONDON INTERNATIONAL STOCK EXCHANGE

FRANKFURT STOCK EXCHANGE

PARIS BOURSE

TOKYO STOCK EXCHANGE

ISTANBUL STOCK EXCHANGE

Function of Secondary Market

Capital Formation: – By mobilizing the savings of the public to productive purposes, facilities in capital formation and there by economic growth.

Security Price Formation: – By quoting the share price in the secondary market the real worth of a security can be know to the investors.

Liquidity to Investment:- Secondary market provides ready and continuous market for listed securities, hence investors can enjoy liquidity to the investors.

Securities traded in the Secondary Market

Government Securities:- Includes securities of Central Government, State Government, State Corporation and Semi Government Authority like Port trust, Municipal corporation etc.

Corporate Securities:- Corporate or Industrial Securities includes equity shares, preference share and debentures of different types.