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What is a syndication offer?

A bundled offer is an offer made by a member of a banking syndicate to stabilize the price of a share before its secondary offer on the NASDAQ swap. Collective offerings help manage the entry of new stocks into the market without causing a dangerous drop in the stock price.

How does a syndication offer work?

A bundle is an attempt by a member of a negotiating group unioni.e. a bank, brokerage or high-end traderto stabilize the price of a specific stock listed on NASDAQ. A collective bid is placed just before the stock makes another stock bid. When this new group of stocks enters the market, the supply of stocks will increase. If there is no immediate direct increase in demand for these shares, the price per share will decline.

The influx of new shares available for purchase and the resulting drop in price leads to volatility and direct financial loss for current shareholders. To support the stock price so that the resulting decline is not so large and damaging, the syndicate member places the highest possible bid to establish a higher price. Essentially, the bundle establishes a high base rate from which the influx of new shares will drive the price down. Without bundled offerings, a secondary offering could cause the price of a stock to fall or cause extreme volatility or a fast market. Syndication offerings help manage the availability of new stocks without hurting the stock itself, current investors, or the NASDAQ as a whole.

The ethics of collective offers

A bundle may be thought of as a form of insider trading or an attempt to short sell a stock. However, since the entry of new shares is announced officially before it occurs, this cannot be considered as insider trading.And because the intention of a bundle is to support the stock price rather than drive it down to benefit from short circuit, the accusation that the bundles are attempts to sell short is also invalid. Collective offers are a technique known to all players in the sector involved in share offers. They understand that the goal is to manage the entry of new stocks and do not view this as an ethics violation.

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