Freed Up

DEFINITION of 'Freed Up'

1. A slang phrase used in the underwriting process to refer to the time when the underwriters are no longer obligated to sell securities at the agreed upon price, as decided by the syndicate. When an underwriter is freed up, it is allowed to trade any remaining securities at the market price.

2. The amount of capital that becomes available to an investor when a position is closed. The "freed up" capital can then be used to invest in other assets.

BREAKING DOWN 'Freed Up'

1. During an initial public offering, underwriters agree to market their allotted securities at a fixed price. Sometimes, the demand for the shares is very large and investors are willing to pay higher prices. Until the syndicate is "freed up" from the fixed price restrictions, it cannot adjust the sale price of the stock, despite increased demand.

2. For example, an investor that holds shares of ABC Company may decide to close the position and use the freed up capital to invest in other opportunities.

Trading Center