Bringing new securities

Chapter 6 page 19

Bringing securities to market is called underwriting. The intermediary is called securities dealer.
It advises the issuing corporation in the preparation of the prospectus, the document that provides a description of the firm and the securities to be offered.

Second, the underwriter often arranges for the purchase of the new issue and bears the risk that some of the securities might remain unsold at the specified price.

The prospectus must be registered with each provincial securities commission in which intends to solicit offers to purchase.

Frequent issuers of securities are not always required to produce a full prospectus containing all relevant company information, as they are already well known to the investing public.

These firms are permitted to issue a simplified prospectus for new issues, sometimes referred as shelf registration .

Mutual funds are permitted to issue simplified prospectus. In contrast to corporate issuers, government bonds are not underwritten by an investment dealer. Instead, investment dealers bid for the bonds that the government is issuing in the expectation of selling them to the public at a profit.


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