While issuers use the primary market for bringing in additional capital from the investors through an Initial Public Offer (IPO) or an Offers for Sale of equity or debt a Rights issues, the shares or instruments thus issued is provided liquidity through the secondary market, by the trading and settlement mechanism on the stock exchanges.

An active secondary market promotes capital formation and the growth of the primary market. This way, the investors in the primary market are assured of a continuous market where they have the option of liquidating their investments. There are several major players in the primary market.

Merchant bankers, financial institutions, mutual funds, individual investors, and foreign institutional investors (FIIs) are the players in the secondary market. The mutual funds, financial institutions, foreign institutional investors (FIIs), stock exchanges, the stockbrokers, and individual investors form part of the secondary market. The capital market intermediaries include the Registrars and Transfer Agents, Custodians, and Depositories, and they provide important infrastructure services to both the primary and secondary markets.