Page 1 - Lesson Note 3
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SAI INTERNATIONAL SCHOOL
Class-12
th
Business studies
Chapter – 10, Financial Market
Topics: Secondary Market, Stock exchange, Depository
(Lesson Note - 38)
SECONDARY MARKET
The secondary market is also known as the stock market or stock exchange. It is a market for the
purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to
enter the market. It also provides liquidity and marketability to existing securities. It also contributes to
economic growth by channelizing funds towards the most productive investments through the process
of disinvestment and reinvestment. Securities are traded, cleared and settled within the regulatory
framework prescribed by SEBI. Advances in information technology have made trading through stock
exchanges accessible from anywhere in the country through trading terminals. Along with the growth of
the primary market in the country, the secondary market has also grown significantly during the last ten
years.
STOCK EXCHANGE https
A stock exchange is an institution which provides a platform for buying and selling of existing securities.
As a market, the stock exchange facilitates the exchange of a security (share, debenture etc.) into
money and vice versa. Stock exchanges help companies raise finance, provide liquidity and
safety of investment to the investors and enhance the credit worthiness of individual
companies.
Meaning of Stock Exchange According to Securities Contracts (Regulation) Act 1956, stock
exchange means anybody of individuals, whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of buying and selling or dealing in
securities. Functions of a Stock Exchange the efficient functioning of a stock exchange creates a
