The secondary market is where securities issued in the primary market are traded. Most securities trading occurs on the secondary market, which provides a liquid, safe and readily available platform for investors to re-sell securities.
The secondary market protects investors through regulation, thus making the market free and fair. This regulation is done through the Securities and Exchange Commission of Zimbabwe (SECZ).
The trading of securities on the secondary market allows investors to sell when the need arises while allowing companies to continue using the money to finance growth over longer periods of time.
Most investors find it easier to sell securities on the secondary market as compared to the primary market. As a result of this, companies monitor and attempt to influence secondary market security prices.
Secondary markets allow security prices to develop based on supply and demand. Companies consider secondary market security prices when making management decisions about growth and expansion.
Other features of the secondary market include:
It gives liquidity to all investors. Any seller in need of cash can easily sell the security due to the presence of a large number of buyers.
There is very little time lag between any new news or information on the company and the stock price reflecting that news. The secondary market quickly adjusts the price to any new development in the security.
There are lower transaction costs due to the high volume of transactions.It is an alternative to saving.
Secondary markets face heavy regulations from the government through the Securities and Exchange
Commission as they are a vital source of capital formation and liquidity for the companies and the investors. High regulation ensure the safety of the investor’s money.Upcoming AGMs and EGMs
Dairibord Holdings Limited’s AGM will be held in the Stewart Room at the Meikles Hotel, on Friday May 31, 2019 at 1200 hours.