Pre-Syndicate Bid

DEFINITION of 'Pre-Syndicate Bid'

A bid entered by a syndicate manager or underwriter in the Nasdaq system to stabilize the price of a Nasdaq security prior to the effective date of a registered secondary offering. The term "penalty bid" is also used.

BREAKING DOWN 'Pre-Syndicate Bid'

This is permissible under SEC Rule 10b-7; otherwise the practice is prohibited. Because the bid serves to stabilize the price of the stock, it helps facilitate distribution of the offering. This process is sometimes also referred to as "pegging".

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RELATED FAQS
  1. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
  2. How does an underwriter syndicate work together on an initial public offering (IPO)?

    Learn how underwriting syndicates work together when helping a company undertake an initial public offering, and learn about ... Read Answer >>
  3. What do the numbers that follow the bid and ask numbers in stock quotes represent? ...

    When looking at stock quotes, there are numbers following the bid and ask prices for a particular stock. These numbers usually ... Read Answer >>
  4. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed ...

    Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people ... Read Answer >>
  5. An underwriting syndicate for a new municipal offering of $10,000,000 has been formed ...

    The correct answer is b. A divided or “Western” syndicate is one in which the members stand alone. When a member of such ... Read Answer >>
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    Read about risks associated with the syndicate loan market, including the problems of adverse selection and asymmetric information ... Read Answer >>
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