The main differences between primary and secondary markets

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To become a shareholder in a company or to invest in the securities market, investors can access the two main markets – the primary and secondary markets.

What is the primary market?

The primary market refers to the place where securities are traded between investors and issuers.

A company, with assistance from a securities firm, can mobilise funds or get additional financing for investment or business expansion through a public offering.

This means that in order for investors (buyers) to buy securities in the primary market, they have to buy securities directly from the issuer during the book building (survey of share price) process, and subscribe or register to purchase securities.

Cash flow in the primary market moves from the investors to the issuer, and they become shareholders of that issuer.

What is the secondary market?

Investors who have acquired securities in the primary market hold the right to put them up for resale in the secondary market.

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The secondary market is for trading securities among investors or between an investor (seller) and other investors (buyers) through a securities firm.

Once trading is executed, the investor (buyer) holds securities and becomes a new shareholder, while the other investors (sellers) receive cash representing the transfer of ownership.

The money from the trading activity in the secondary market goes directly to the shareholder or the investor who sells their securities, not to the issuer. This means the issuer does not gain any direct benefit from the trading in the secondary market.

The secondary market is akin to an auction in which the trading of securities is done through the stock exchange in Cambodia, which is the Cambodia Securities Exchange (CSX).

The CSX was established by a joint-venture agreement between the Royal Government of Cambodia, represented by the Ministry of Economics and Finance (MEF), and the Korea Exchange (KRX).

In order to get into the securities market through investment in and/or the buying or selling of securities, the first step is for an investor to apply for an investor ID, which can be done online via the SECC website – – or through a securities firm licensed by the SECC.

After receiving their investor ID, the investor can open a trading account directly with a licensed securities firm. The investor can then create an account with a settlement agent recognised by the SECC.

After completing these steps, investors are then able to deposit money for investing or buying securities from an issuer in the primary market – when there is new initial public offering (IPO) – and the secondary market.

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Prepared by: The Securities and Exchange Commission of Cambodia, Securities Market Supervision Department.
E-mail: [email protected]
Phone: 023 885611