Industrial Securities Market

The Industrial Securities Market refers to the segment of the financial market where industrial concerns (companies) raise capital or debt by issuing appropriate instruments. It encompasses two key sub-markets:

1. Primary Market (New Issue Market):

• Definition: This is where new securities are initially issued to the public.
• Process: Companies issue new shares (equity) or bonds (debt) to raise capital for the first time (Initial Public Offering - IPO) or to raise additional funds for expansion (follow-on public offering).
• Key Players:
  • Issuing companies: Raise capital through the issuance of securities.
  • Investment banks: Act as underwriters, helping companies issue securities.
  • Investors: Purchase newly issued securities.

2. Secondary Market (Stock Exchange):

• Definition: This is where previously issued securities are traded among investors.
• Process: Investors buy and sell existing securities (stocks, bonds) from other investors.
• Key Players:
  • Investors: Buy and sell securities.
  • Brokers: Facilitate the buying and selling of securities on behalf of investors.
  • Stock exchanges: Provide a platform for trading securities.

Key Functions of the Industrial Securities Market:

• Capital formation: Enables companies to raise capital for growth and expansion.
• Price discovery: Determines the market value of securities.
• Liquidity: Provides liquidity to investors by facilitating the buying and selling of securities.
• Corporate governance: Promotes corporate governance by encouraging transparency and accountability among companies.

This market plays a crucial role in the economic development of a country by facilitating the flow of capital from savers to businesses.