subscription/underwriting

English translation: direct acquisition/guarantee of resale

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)

English term or phrase:	subscription/underwriting
Selected answer:	direct acquisition/guarantee of resale
Entered by:	Martin Riordan

12:25 Mar 8, 2011

English language (monolingual) [PRO]
Bus/Financial - Investment / Securities

English term or phrase: subscription/underwriting

Hi everyone!

Could you please explain to me the difference between these two words here:

"to acquire any such shares, stock, debentures, debenture stock, bonds, notes, obligations or securities by original subscription, contract, tender, purchase, exchange, under-writing, participation in syndicates or otherwise, or whether or not fully paid up and duly subscribed for the same subject to such terms and conditions (if any) as may be thought fit"

Thanks!

Céline Hérouart KudoZ activity Questions: 60 (15 open) (6 closed without grading) Answers: 1 France
Local time: 14:25

direct acquisition/guarantee of resale

Explanation:
With subscription, the purchaser of the financial product applies to acquire them directly from the issuer.

With underwriting, a financial company (bank, investment company, etc.) assumes the risk and committment of reselling the total issue of the product to individual investors. I.e., this company "underwrites", or guarantees, the placement.

Subscription refers to the process of investors signing up and committing to invest in a financial instrument, before the actual closing of the purchase.

Underwriting refers to a process whereby investment bankers (underwriters) buy a new issue of securities from the issuing corporation or government entity and resell them to the public.

Selected response from:

Martin Riordan
Brazil
Local time: 09:25

Grading comment

Selected automatically based on peer agreement.
4 KudoZ points were awarded for this answer

SUMMARY OF ALL EXPLANATIONS PROVIDED

4 +2

direct acquisition/guarantee of resale

Martin Riordan

different methods of purchasing shares in a company

Allison Wright (X)

Summary of reference entries provided

Underwriting/Subscription

Ioanna Daskalopoulou

Answers

30 mins confidence:

peer agreement (net): +2

direct acquisition/guarantee of resale

When a new security is to be issued, investors typically have two weeks to submit their subscription orders. At the end of this "subscription period", the issuer announces the offering price and the method of allotment.
Once the underwriting agreement is struck, the underwriter bears the risk of being able to sell the underlying securities, and the cost of holding them on its books until such time in the future that they may be favorably sold.

Reference: http://en.wikipedia.org/wiki/Subscription_%28finance%29
Reference: http://en.wikipedia.org/wiki/Underwriting

Martin Riordan
Brazil
Local time: 09:25
Native speaker of:

English
PRO pts in category: 8

Grading comment

Selected automatically based on peer agreement.

43 mins confidence:

different methods of purchasing shares in a company

Explanation:
Share subscription: Purchase of the shares of a firm by an entity (subscriber) who becomes a shareholder upon its inclusion in the shareholders register.
If there is a "rights issue" (i.e. the issue of shares in a company for the purpose of raising capital), such a rights issue may be underwritten. The underwriter would normally be an investment bank, or similar institution.
If the shares under the rights issue are not fully subscribed (i.e. not all of them are purchased by the public), then the underwriter would purchase the balance of the unsold shares, and would normally be entitled to sell them. He thus guarantee that the company raises the amount of capital it requires. The underwriter purchases such shares after the fixed date upon which the rights issue "closes", or is no longer available to members of the public.

Reference: http://www.businessdictionary.com/definition/share-subscript...

Allison Wright (X)
Portugal
Local time: 13:25
Native speaker of: English

Reference comments

20 hrs

Reference: Underwriting/Subscription

Reference information:
What Does Underwriting Mean?
1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).

2. The process of issuing insurance policies.
Investopedia explains Underwriting
The word "underwriter" is said to have come from the practice of having each risk-taker write his or her name under the total amount of risk that he or she was willing to accept at a specified premium. In a way, this is still true today, as new issues are usually brought to market by an underwriting syndicate in which each firm takes the responsibility (and risk) of selling its specific allotment.

Reference: http://www.investopedia.com/terms/u/underwriting.asp
Reference: http://www.investopedia.com/terms/s/subscribed.asp

Ioanna Daskalopoulou
Greece
Specializes in field
Native speaker of:

Greek,

English

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