Primary Markets versus Secondary Markets

Primary markets are the markets in which corporations raise new capital. For example, if a private company has an IPO or if a public company sells a new issue of common stock to raise capital, this would be a primary market transaction. The corporation selling the newly created stock receives the proceeds from such a transaction.

Secondary markets are markets in which existing, already outstanding securities are traded among investors. Thus, if you decided to buy 1,000 shares of Starbucks stock, the purchase would occur in the secondary market. Secondary markets exist for many financial securities, including stocks and bonds.

It is important to remember that the company whose securities are being traded is not involved in a secondary market transaction and thus does not receive any funds from such a sale.

CAN YOU PLEASE EXPLAIN TO ME THE LAST SENTENCE? HOW DOES THE COMPANY NOT GET FUNDS FROM THE TRANSACTION?