Selling syndicate definition
/What is a Selling Syndicate?
A selling syndicate is a group of underwriters working together to sell a securities issuance to the investing public. The group does so by buying the securities from the issuer and reselling them. Sales are typically made to smaller brokerage firms, which then sell the securities to individual investors. A selling syndicate is not a permanent arrangement; underwriters come together for the sale of a specific security and then split up once the sale transaction has been completed.
Advantages of a Selling Syndicate
There are several advantages to setting up a selling syndicate. They are as follows:
Less risk. The risk associated with the sale of a security can be spread across a large group of underwriters. This is a particular concern when the underwriters have guaranteed to purchase the security at a fixed price from the issuer, since there is a risk that they will not be able to resell them to investors.
Larger investor pool. The syndicate has access to a larger group of investors than any single underwriter would have if operating alone. This makes it easier to sell a large security issuance.
Greater expertise. There are more experts scattered among the various underwriters in the group, making it easier to handle the more specialized securities issuances.
Terms Similar to Selling Syndicate
A selling syndicate is also known as a selling group.