In MSRB-defined markets, which market is primarily associated with underwriting new issues?

• A. Primary market
• B. Secondary market
• C. Both markets equally
• D. Neither market includes underwriting

Answer: (A)

Underwriting new issues is a function of the primary market. This is the stage where a new municipal issue is created, priced, and sold to investors through underwriters or underwriting syndicates. The primary market encompasses the initial issuance and distribution of securities, including the underwriting process, pricing, and allocation. In contrast, the secondary market involves trading existing, issued securities among investors after the issue has been sold, with no new issuance or underwriting taking place. So, the activity most closely associated with underwriting new issues is the primary market.