What is Primary Market?

The primary market is the portion of the capital market that is responsible for the issuance and sale of equity-based securities directly by the issuer for the first time. Primary market stock issuances usually take place through Initial Public Offerings (IPOs), private placements, preferred allotments, and rights issuances. Primary markets are usually the initial source of a new security which is typically sold to enterprises, governments, and other parties to obtain financing through debt-based or equity-based securities. In contrast, the secondary market is usually made up of traditional stock markets such as the New York Stock Exchange (NYSE) or NASDAQ.