The secondary market, also called the aftermarket and follow on public offering, is the financial market in which previously issued financial instruments such as stocks, bonds, options, and futures are bought and sold. The initial sale of the security by the issuer to a purchaser, who pays proceeds to the issuer, is the primary market. All sales after the initial sale of the security are sales in the secondary market. Whereas the term primary market refers to the market for new issues of securities, and "[a] market is primary if the proceeds of sales go to the issuer of the securities sold," the secondary market in contrast is the market created by the later trading of such securities.
With primary issuances of securities or financial instruments (the primary market), often an underwriter purchases these securities directly from issuers, such as corporations issuing shares in an initial public offering (IPO) or private placement. Then the underwriter re-sells the securities to other buyers (earning a fee), in what is referred to as a secondary market or aftermarket (or a buyer in contrast may buy directly from the federal government, in the case of a government issuing treasuries). Trading in securities that were originally issued a long time ago, where one investor sells to another investor and which have little impact on the company that originated the securities, also happen on the secondary market.
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