Which market is primarily involved in the issuance of new securities?

The primary market is where new securities are issued and sold for the first time. In this market, companies, governments, and other entities can raise capital by selling stocks, bonds, and other financial instruments directly to investors. This process often involves initial public offerings (IPOs) for equities or new debt offerings.

In contrast, the secondary market is where previously issued securities are traded among investors. This market does not involve the creation of new securities; rather, it facilitates the buying and selling of existing ones. The derivatives market focuses on financial contracts whose value is derived from underlying assets, rather than the direct issuance of new securities. Similarly, the forex market deals with currency trading and is not involved in the issuance of securities.

Understanding the distinction between these markets is crucial for recognizing how capital flows in the financial system and how entities obtain funding through new securities.