What is the primary function of the primary market?

The primary market is fundamentally dedicated to the creation and issuance of new securities. This is where companies go public by offering their shares for the first time through initial public offerings (IPOs). The funds raised from these new securities go directly to the issuing companies, enabling them to finance operations, expansions, research, or pay off debts.

In contrast, trading previously issued securities occurs in the secondary market, where investors buy and sell stocks among themselves. Liquidity is also a vital aspect of the secondary market as it allows for the easy transfer of ownership of existing securities. While regulating financial institutions is essential in maintaining market integrity and protecting investors, it does not pertain to the primary function of the primary market itself. The primary market's main role focuses exclusively on the introduction of new investments to the public. Thus, the identification of issuing initial public offerings as the primary function accurately reflects the essence and purpose of the primary market.