Ch3_1__1

Ch3_1__1 - How Securities are traded Chapter 3(1) Primary...

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How Securities are traded Chapter 3(1)
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Primary market Issuance of securities to public Investment banks as major participants Public offers and Private Placement Issuer receive the proceeds of sale, net of fees Public offers Initial Public Offering Sale of securities of private co to the public Seasoned offering Sale of shares of existing listed company
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Underwriting arrangement Firm commitment Ibank purchase the security from the issuer and resell to the public Issuer sell the security at offer price less a discount, compensation to Ibank Underwriter assume full risk
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Underwriting arrangement Best effort Ibank does not purchase the securities Intermediary role Advise on pricing Bears no risk
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Private placement Sale to a limited number of sophisticated investors Institutions are the players Active market for debt issuance Not active market for stock
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IPO Registration with the regulatory authority (HKEx,
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This note was uploaded on 07/12/2011 for the course FINA 221 taught by Professor Na during the Spring '09 term at HKUST.

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Ch3_1__1 - How Securities are traded Chapter 3(1) Primary...

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