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Reallowance

What is 'Reallowance'

In securities underwriting, the fee that the underwriting group pays to a securities firm that is not part of the syndicate, but that still sells shares in the offering. Reallowance is typically a percentage of the underwriting spread negotiated by the selling syndicate for the issue. It provides a monetary incentive for a broker-dealer that is not part of the syndicate to sell shares of the issue to its own client base.

Explaining 'Reallowance'

The selling syndicate may be amenable to parting with a portion of the underwriting spread in the form of reallowance for large issues where investor demand is somewhat uncertain. For example, if the underwriting spread for an issue priced at $30 is $2.50, the reallowance may range from 50 cents to 75 cents, depending on investor demand for the issue and the difficulty in placing it.


Further Reading


Sailing in rough water: market volatility and corporate finance
www.sciencedirect.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

Global government securities markets: economics and politics of recent market microstructure reformsGlobal government securities markets: economics and politics of recent market microstructure reforms
link.springer.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

The political economy of the Securities Act of 1933The political economy of the Securities Act of 1933
www.journals.uchicago.edu [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

World Bank financing for urban developmentWorld Bank financing for urban development
link.springer.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

4 Global Government Securities Markets: Economics and Politics of Recent Market Microstructure Reforms4 Global Government Securities Markets: Economics and Politics of Recent Market Microstructure Reforms
link.springer.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

Are there windows of opportunity for convertible debt issuance? Evidence for Western EuropeAre there windows of opportunity for convertible debt issuance? Evidence for Western Europe
www.sciencedirect.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …

Sailing in rough water: Market volatility and corporate financeSailing in rough water: Market volatility and corporate finance
papers.ssrn.com [PDF]
… increased as markets incorporated bearish worries over a deepening and continuing economic crisis in … of how influential is market volatility in financing decisions for the economy at large … turn and use them to motivate various hypotheses about the volatility–finance relationship …


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