Secondary Market :
Capital market is divided into the Primary Market and the Secondary Market.
Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange.
It comprises equity markets and debt markets.
This market is a trading avenue in which already existing/pre-issued securities are traded amongst the investors. It can be either an auction or a dealer market. While stock exchange is the part of an auction market, Over the Counter (OTC) market is a part of the dealer market.
For the general investors, this market provides an efficient platform for trading of securities and price discovery.
For the managers of the company, secondary (equity) markets serve as a monitoring and control conduit – by facilitating value enhancing control activities, enabling implementation of incentive- based management contracts and aggregating information (via price discovery) that guides management decisions.
Banks facilitate secondary market transitions by opening direct trading and demat accounts to individuals and companies. Banks also extend credit against securities. They may also act as clearing house banks.
Furthermore, the market is operates under the guidelines of Securities and Exchange Board of India (SEBI).