Security Market is one of the financial markets where stocks and debts are traded. The primary security markets are the market for government securities, the money market, the capital market, the derivatives market and the mortgage market.

Organized securities markets and stock exchanges are a product of economic development. In the early years of economic growth, most of a country's industrial units are small and their capital requirements are relatively modest. The rate of saving is low, and institutions for channeling private savings into investment are generally lacking. As the economy progresses and national income grows, new institutions enter the financial picture to direct the mounting volume of savings into productive outlets. The appearance of growing number of individual and institutional investors creates a need for trading markets to speed up transactions and enable stockholders swiftly and easily to convert their holdings to cash.

At this stage of development, corporations usually meet less of their financing needs through direct sell of securities in the new issue market and obtain a larger percentage through reinvesting their own earnings. This plowing back of earnings is not insensitive to the judgment of investors: if the prospects of a company are good, investors bid up the price of its shares in the trading market and show a willingness to forego dividends for the possibility of long-term capital gains achieved through internal growth. Thus, when a company is able to finance its expansion by means of reinvested earnings rather than by new stock issues, the trading segment becomes the more important aspect of the capital market.