Legal Definitions - primary market

The primary market is where new securities are issued and sold for the first time. This is where companies raise capital by selling their stocks or bonds to investors. The primary market is also known as the "new issue market."

For example, if a company decides to go public and issue an initial public offering (IPO), they will do so in the primary market. Investors who purchase the shares in the IPO will be buying them directly from the company, and the proceeds from the sale will go to the company.

Another example is when a company issues new bonds to raise capital. The bonds will be sold in the primary market to investors who are willing to lend money to the company in exchange for interest payments.

The primary market is important for companies to raise capital and for investors to have the opportunity to invest in new securities. It is also important for the overall economy as it allows companies to grow and expand their operations.