Primary and secondary stock exchanges serve distinct roles in the financial markets. A primary stock exchange is where securities are issued for the first time through Initial Public Offerings (IPOs). Companies raise capital by offering shares directly to investors, with proceeds going to the issuing company. The primary exchange acts as a platform for this transaction, enabling businesses to secure funding for growth and expansion.

In contrast, secondary stock exchanges facilitate the buying and selling of already-issued securities among investors. These exchanges do not involve the issuing company directly; instead, they provide liquidity and a marketplace for investors to trade shares. Examples include the New York Stock Exchange (NYSE) and NASDAQ, where shares are continually traded after their initial issuance.

The primary exchange is a one-time event for security, while secondary exchanges host ongoing transactions. Pricing mechanisms differ as well; in the primary market, prices are determined by the issuing company and underwriters, whereas in the secondary market, prices fluctuate based on supply and demand dynamics.

Together, these exchanges create a comprehensive financial ecosystem. The primary market supports companies in raising capital, while the secondary market ensures liquidity and accessibility for investors, driving overall market efficiency.