Types of Capital Market - Wikipedia of Finance - Primary Market - Secondary Market

Types of Capital Market


A financial market is categorized as various different types of capital market whenever customers and/or sellers come together to trade assets such as equities, bonds, currencies as well as derivatives. Financial markets can be found in nearly everywhere in the world. For example: you can trade in New York Stock Exchange (NYSE) if you are located in USA. If you are staying in India then you can trade in National Stock Exchange (NSE). Investors or individuals reach out to a large wide range of financial markets and exchanges to trade in different types of capital market instruments.

Financial institutions and financial markets assist businesses in fund raising. They may assist in take bank loan as well as repaying this with an interest, issuing bonds towards borrowed capital of individuals and investors that will be repaid at a fixed rate of interest, or offering investors ownership in partial form in the business plus benefits of its recurring cash flows, or by issuing stock.

Types of Capital Market:

Capital market is certainly where institutions as well as individuals trade financial securities. Companies, organizations as well as individuals usually prepare to buy or sell securities in various types of capital market primary and secondary to raise funds. Broadly capital markets are divided into two major markets they are primary market and secondary markets.

1. Primary Market:

Primary markets are those types of capital market instruments where new securities are issues on the exchange. Governments, organizations, companies obtain funding thru equity or debt securities. Primary markets, in addition popularly known as IPO (Initial Public Offering). This facilitated helps underwriting groups and investment banks to set the initial price range for a offered security when then sell those securities directly to people.

The primary markets tend to be where investors, individuals get very first chance to take part in your brand new securities. The issuing organization or a company then receives funding from sale of securities, and then those funds will be used for business operations as well as expansion.

2. Secondary Market:

Secondary markets are those types of capital market instruments where investors choose to buy securities or even assets from other investors rather than buying from the issuing company. Firstly, Securities and Exchange Commission (SEC) registers securities before issuing new securities in Primary market. Secondly, then once new issues of securities are purchased by initial investors they then begin trading of buying and selling securities in secondary market.

Secondary market is where the trading of those securities take place into different exchanges and are traded daily during trading days and trading times specified by exchanges. Primary markets can notice increasing volatility in secondary markets because it is tough to accurately predict investor thoughts and interest upon securities.

There are various types of secondary markets where an individual, investor or a company can buy or sell securities from one person to other person. Here is the list of different types of capital market in secondary market available for trading securities. They are:

  • Stock Markets.
  • Bond Markets.
  • Derivatives Markets.
  • Commodity Market.
  • Forex and Inter-bank Market.
  • Third Markets.
  • Fourth Markets.
  • Money Market.
  • OTC (Over the Counter) Market.
  • Cash or Spot Market.

These are some of the most frequently used types of capital market instruments in the financial market. We have added many financial tutorial courses where you can  go through in more details according to your interest.


Here we have understood different types of capital market primary and secondary. Primary Market which is known as New Issue Market, it is the market for dealing of the new securities, for the first time. It embraces both initial public offers as well as even further pubic offers. Secondly, Secondary market where market offers old securities. Which means, your securities that are earlier freshly issued in the primary market are now traded in this secondary market. This buying and selling happens anywhere between individuals or companies.

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