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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market

Which of the following is a feature that distinguishes the primary market from the secondary market in India?

The primary market is where securities are issued for the first time and the proceeds go to the issuer. The secondary market, in contrast, involves trading of already issued securities among investors, with price discovery by order matching on exchanges and rolling settlement.

  1. AExisting securities are traded between investors on a stock exchange
  2. BSecurities are issued for the first time and funds flow to the issuerCorrect
  3. CPrices are discovered through continuous order matching
  4. DSettlement is always carried out on a rolling basis

Explanation

The primary market is where new securities are issued, such as through an IPO, and the money raised goes to the issuer. Trading among investors, continuous order matching and rolling settlement are features of the secondary market, so the other options describe it instead.

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