Primary markets are markets where securities are directly offered to the general public by a company or issuer with the help of a merchant bank as an intermediary who acts as an expert in issue management on behalf of the issuer. The issue management is done by the issue manager under the merchant banking function licensed by the Securities Board of Nepal (SEBON).
Secondary markets are markets where securities, both equity and debt, are traded after being initially offered to the public in the primary market and listed on the stock exchanges. Trading of listed securities takes place in the secondary market. For a company, secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions. For an investor, the secondary market provides an efficient platform for trading as well as the liquidity of his investment made in securities.