What is a primary market and how does it differ from a secondary market?
A primary market for shares is that in which the investor purchases the shares of a corporation directly from the Company by way of a public offer i.e. IPO, PO, Rights Issue, etc. Shares purchased in the primary market will come to the investor in the form of a physical share certificate. The share certificates will then have to be verified before they can be traded on the Exchange. A secondary market is one where the shareholders of various quoted companies meet and trade shares amongst themselves through their registered stockbrokers. The presence of secondary markets is what gives stocks their liquidity quality/ characteristic by creating a ready market for the sale of these assets. The Nigerian Stock Exchange is an excellent example of a secondary market.
