What is a 'Pipeline'

A pipeline is a phase of progress toward a long-term goal that typically is associated with some uncertainty or risk. It can also refer to an entity that primarily serves as a conduit.


A pipeline is often an important phase for development of an investment or investment product. The following examples exemplify various aspects of a pipeline.

1) The underwriting procedure which must be completed by the Securities & Exchange Commission (SEC) before a security can be offered for sale to the public.

2) The period of time between a mortgage application and the purchase of the property. During the pipeline phase there is a high level of risk for potential change in financial factors affecting the final closing of a property purchase.

3) A new security issue must go through the SEC's pipeline before it is legally cleared for sale to the public. This practice attempts to screen out fraudulent investments and ensures security offerings are presented to the public in an accurate fashion.

Pipeline Companies

Pipeline theory suggests that companies serving primarily as a conduit should receive certain tax breaks. These companies can be referred to as pipeline companies. Such firms are usually exempt from normal corporate taxes, since they simply serve as an investment conduit, or pipeline, rather than actually producing goods and services as a regular corporation does. A mutual fund structured as a trust would be exempt from corporate taxes and considered an investment pipeline.

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