Series 79: Components Of The Underwriting Spread

Taken from our Series 79 Top-off Online Guide

Components of the Underwriting Spread

The underwriting spread is not divided equally, or even pro rata, among the underwriters. Instead, the spread is divided into three primary components: the management fee, the underwriting fee, and the selling concession. The amount and source of a syndicate member’s compensation depends on its role in the syndicate. The most common arrangement is a 20/20/60 division of the price of each share, as described in the following table.

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Typical Components of the Underwriting Spread

Fee Component

Percentage of Spread

Goes to

Management Fee

20%

Lead manager and co-managers (if any)