This means that market participants can trade stocks and other qualifying financial products with complete confidence and with little to no operational risk on the stock exchanges. The stock markets function as primary and secondary markets, with each following the norms laid down by the regulator. 3
An IPO, or initial public offering, on the stock market serves as a primary market for corporations to issue and sell their stock to the general public for the first time (IPO). It’s a good way for businesses to get the money they need from investors. That’s basically what an initial public offering (IPO) is all about: It’s a way for a firm to get the word out about itself by selling a portion of its stock at a predetermined price to the general public.
A corporation must provide a site where these shares can be traded in order to make this procedure easier. The stock market serves as the foundation for this market. All things considered, a successful sale of 5 million shares at a price of $10 per share would net the corporation $50,000,000. Investors will receive shares of the company, which they can expect to hold for the time period of their choosing, with the hope of seeing their investment grow in value and receiving any future dividend payments. As a service provider, the stock exchange receives a fee from the company and its financial partners for facilitating this capital-raising process.
The stock exchange also functions as a trading platform for the listed shares after the initial IPO exercise known as the listing process. A portion of this is referred to as a secondary market. During secondary market activity, the stock exchange charges a fee for each transaction that occurs on its platform.