Capital Market, Types of Capital Market, Operation of Primary & Secondary Market, ROLE OF CAPITAL MARKET

1. Operation of Capital Market in Bangladesh
Capital Market
Capital market mainly refers to the stock and share market in a country. When banking system
cannot totally meet up the needs for funds to the market economy, capital market stands up to
supplement it, Companies and government can raise funds for long-term investments via the
capital market. The capital market includes the stock market, the bond market, and the primary
market.
Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia
region. It has two full-fledged automated stock exchanges namely Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by
CSE.
It also consists of a dedicated regulator, the Securities and Exchange Commission (SEC), since,
it implements rules and regulations, monitors their implications to operate and develop the
capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central
Depository in Bangladesh that provides facilities for the settlement of transactions of
dematerialized securities in CSE and DSE.
Types of Capital Market:
i. The Primary Market: The primary market deals with newly issued securities and is
responsible for generating new long-term capital.
ii. The secondary Market: The secondary market handles the trading of previously-
issued securities, and must remain highly liquid in nature because most of the securities
are sold by investors.

2. Operation of Primary & Secondary Market:
Investors Share purchase
Investor shares: Mutual fund shares purchased by individual investors as opposed to
institutional shareholders.
Stock Market: Participants in the stock market range from small individual stock investors to
large hedge. Provide a bid and ask price at which they will always purchase or sell their stock.
A share of stock is the smallest unit of ownership in a company. Investors buy preferred stock
for its current income from dividends, so look for companies that make big profit to use.
Investment Bangladesh stock market (CSE and DSE): Investment in primary and secondary
market share is eligible for investment allowance. The steps necessary in order to buy / sell
share in Bangladesh stock.
Primary Market: Primary markets are facilitated by underwriting groups, which consist of
recall that the stock market is actually comprised to two markets. Knowing how the primary
and secondary markets work is key to understanding how stock's trade. Without them, stock
market would be much harder to capital market depends on primary market. Companies,
governments or public sector intuitions can obtain funds through the sale of a new stock or
bond issues through primary market 'The capital market is divided into a primary and a
secondary market. In a first step, securities such as share and bonds are placed directly with
investors. The primary market refers to where shares are created, are sold by the issuing
company to the financial benefit in the farm of raising capital is the most distinct A company
issues new shares or debentures it is known as initial public offering (IPO) The primary market
is that part of the capital markets that deals with of a new stock issue, this sale is an IPO. The
issuance of new securities companies, government or public sector institutions can obtain
funding through the sale of a new stock or bond issue. This is typically done through a syndicate
of securities dealers.

3. Features of Primly Markets:
This is the market for new long term equity capital. The primary market is the trotter where the
securities are sold for the first time. Therefore it is also called the new issue market (NIM) in a
primary issue, the securities are issued by the company directly to investors. The company
receives the money and issues new securities certificates to the investors. Primary issues are
used by companies for the purpose of setting up new business or for expected or modernizing
the existing business. The primary market performs the crucial function of facilitating capital
formation in the economy. Methods of issuing securities in the primary market are Initial Public
Offering: Rights issue (for existing companies), preferential issue. In stock market the initial
public offer constitutes the primary market. When someone deals in already issued shares then
it is of secondary market a newly issued IPO will be considered a primary market trade when
the shares are firs purchased by investors.
Secondary Market: also known as the aftermarket is the financial market where previously
issued securities and financial instruments such as stock, bonds, options, and features are
bought and sold. The term secondary market is also used to refer to the market for any used
goods or assets, or an alternative use for an existing product or asset where the customer base
is the second market (Ex- corn has been traditionally used primarily for food production and
feed stock. But a 'second' or 'third' market has developed for use in ethanol production)
Secondary market term is to refer to loan's which are sold by a mortgage bank to investors such
as Fannie Mac and Freddie Mac. Secondary Market: A market where investors purchase
securities or assets from other investors, rater from issuing companies themselves. The market
in which securities are traded after they are initially offered in the primary market. Most trading
occurs in the secondary market. Secondary market the market where existing bans, Marketable
securities, stock, bonds, and other assets are sold to investors, either directly or through. A
market in which an investors purchase a securities from another investor rather than the issuer,
the secondary market is a financial market in which investors buy and sell financial products
directly from each other.
Secondary markets can be said to exist in some real estate context as well (e.g. ownership
shares of time-share vacation homes are bought and sold by investors, traders and speculations
alike. Secondary market's or private share such as second market and share post provide
founders, employees, angels and institutional investors The process of selling new issues to

4. investors is called under writing in the case of a new stock issue. This sale is an initial public
offering (IPO). Dealers earn a commission that is built into the price of the security offering
through it can be found in the prospectus.
IPO:
The first sale of stock by a private company to the public. IPO are often issued by smaller,
younger companies seeking the capital to expand, but can also be the main purpose of an IPO
is to raise capital for the corporation. IPO's are offer stock for sale to the public the first time.
IPO concepts an initial public offer is the selling of securities to the basic steps for a company
venturing and IPO is the primary market. The IPO process requires SEC and shareholder
approval, in addition to choosing an exchange and trading symbol.
ROLE OF CAPITAL MARKET
The primary role of the capital market is to raise long-term funds for governments, banks, and
corporations while providing a platform for the trading of securities. This fund raising is
regulated by the performance of the stock and bond markets within the capital market.
Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia
region. It has two full-fledged automated stock exchanges namely - Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE). It also consists of a dedicated regulator, the
Securities and Exchange Commission (SEC), sire, i implements rubs and regulations, monitors
their implications to operate and develop the capita market.
Nature of Dhaka Stock Exchange: There are four markets in the system
Public Market: Only trading of market lot share is done here through automatic matching.
Spot Market: Spot transactions are done hem through automatic matching which must be
settled within 24 bars.
Block Market: A place where bulk quantities of shares are traded through pick and fill basis.
Odd Lot Market: Odd lot scripts are traded here based on pick and fill basis.

5. Market System:
Buying a Mutual Fund Directly from a Mutual Fund Company
If we know you want to have your money invested in a specific mutual fund, you can often
open an account directly with the 'ritual fund itself We have to fill out paperwork online, mail
it in with a check, and tell the company whether want to open a regular account, or a special
account such as a retirement Roth IRA or Traditional IRA. We can even set it up so that the
mutual fund automatically makes investments for by regularly withdrawing money from mu-
checking or savings account each month! This technique, called dollar cost averaging, is a
fantastic way to smooth out the average price you pay for our mutual fund shares and helps
lower the risk that put