In finance, the "primary market" refers to the market for direct investment in a company or other entity (partnership, trust or what-have-you). Once an investment is made, it can be traded between investors on the secondary market.
By way of example:
- The initial public offering of a company is on the primary market. Trading in its stock is on the secondary market.
- The issuance of a corporate bond or government bond is on the primary market. Trading in that bond is on the secondary market.
- A loan to a company is conducted on the primary market, but the loan can then be sold through the secondary market, or securitized on the primary market (as this involves pooling the loan to create a new investment).
- Credit derivatives are issued on a primary market and traded among investors on the secondary market.