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Underwriter

• An underwriter is an individual distributing securities as an intermediary between the issuer of the security and the buyer.

• A dealer who purchases new issues from the issuer and distributes them to investors. Underwriting is one function of an investment banker.

• A party that guarantees the proceeds to the firm from a security sale, thereby in effect taking ownership of the securities. Or, stated differently, a firm, usually an investment bank, that buys an issue of securities from a company and resells it to investors.

 
 Embedded terms in definition
 Dealer
Firm
Investment banker
Investment bank
Issuer
Issue
New issue
Sale
Securities
Security
Underwriting
 
 Referenced Terms
 All or none underwriting: An arrangement whereby a security issue is canceled if the Underwriter is unable to re-sell the entire issue.

 Banking group: Includes the lead Underwriter and, in most larger deals, a number of other large investment dealers.

 Best efforts sale: A method of securities distribution/ underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed price sale, where the Underwriter agrees to sell a specific number of shares (with the securities firm holding any unsold shares in its own account if necessary).

 Bid form: Is a document submitted by an Underwriter for a competitive municipal security bid.

 Book runner: The managing Underwriter for a new issue. The book runner maintains the book of securities sold.Refers to the lead or managing Underwriter who runs or maintains the books for the transaction. Often, this underwriter is given total credit for the size of the deal in some metrics. Here, the total value of the deal would be credited to that underwriter as if they solely did the deal. Of course, other parties would receive their remuneration.

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