What Does a Commercial Underwriter Do?

A stock underwriter is a way for securities dealers to engage in indirect offerings. The general procedure for securities underwriters to engage in underwriting is that the issuing intermediary sells securities to the society within the prescribed period in accordance with the issuance amount and conditions of the underwriting contract signed with the securities issuer. On the sales deadline, the unsold amount shall be subscribed by the underwriter, and all securities shall be paid to the issuer at the prescribed time. If the issue amount is large, in order to ensure the smooth and successful issue of securities, the underwriters usually form an underwriting syndicate to jointly underwrite the issue of securities. The stock underwriter shall have the following characteristics: he shall be able to guarantee the issuance of the total amount of securities issued. Because he sells first, then buys off, on the one hand, the cost is higher than the agency, lower than underwriting, and the issuer's burden is not too heavy; on the other hand, it also relatively reduces the risk pressure of the issuing intermediary. Underwriters have rich experience, so they help to use their own experience to improve the credibility of the enterprise and make the social impact of the enterprise larger. ^[1]

Stock underwriter

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A stock underwriter is a way for securities dealers to engage in indirect offerings. The general procedure for securities underwriters to engage in underwriting is that the issuing intermediary sells securities to the society within the prescribed period in accordance with the issuance amount and conditions of the underwriting contract signed with the securities issuer. On the sales deadline, the unsold amount shall be subscribed by the underwriter, and all securities shall be paid to the issuer at the prescribed time. If the issue amount is large, in order to ensure the smooth and successful issue of securities, the underwriters usually form an underwriting syndicate to jointly underwrite the issue of securities. The stock underwriter shall have the following characteristics: he shall be able to guarantee the issuance of the total amount of securities issued. Because he sells first, then buys off, on the one hand, the cost is higher than the agency, lower than underwriting, and the issuer's burden is not too heavy; on the other hand, it also relatively reduces the risk pressure of the issuing intermediary. Underwriters have rich experience, so they help to use their own experience to improve the credibility of the enterprise and make the social impact of the enterprise larger. ^[1]

A stock underwriter refers to an intermediary agency that manages stock underwriting business and undertakes the tasks of stock underwriting and capital exchange. It is the hub of stock issuers and is directly related to the success or failure of the stock issue market. There are investment banks, trust investment companies, and securities investment companies.

The stock underwriter mainly deals with the decentralized stock sales of listed stocks, including underwriting stocks and consignment stocks. Under the consignment system, the stock underwriter is only responsible for the consignment procedures and does not guarantee that all the shares are sold; under the underwriting system, the stock underwriter must bear the responsibility of fully selling the shares. Interest income from the investor's purchase price to the return period.

(1) Securities companies.

Securities companies occupy an important position in the securities market. In order to give full play to the positive role of securities companies, all countries strictly control the establishment and operation of securities companies. The establishment of a securities company must have a statutory amount of capital; at the same time, employees must have the knowledge, experience and good social reputation to engage in securities business. To protect the interests of investors, the law generally requires the following benchmarks to supervise the financial affairs of securities companies:

1. Liability ratio benchmark, the main purpose is to keep the liabilities of securities companies within a reasonable range and ensure the ability to pay. The ratio of the total amount of liabilities of securities companies to the amount of net assets is generally not allowed to exceed 10 times.

2. Benchmark of asset holding status. Due to the drastic changes in securities prices and trading volumes, securities companies will be greatly affected. In this way, the changes in the profits and losses of securities companies will be greater than in other industries. Starting from the pursuit of the stability of securities company operations, some reserve standards are generally mandatory.

(1) Income reserve. Securities companies must accumulate more than one-fifth of the monetary income distribution as income reserve in each final accounting period. Earnings reserves can only be used to replenish capital losses or be included in capital.

(2) Trading loss reserves. When the securities company's gains from securities trading exceed the losses from trading, it must accumulate as a reserve for trading losses at a rate prescribed by law, and use them as a supplement when trading losses occur. The loss allowance for stock trading is 30%.

(3) Reserve for liability for securities transactions. In the case of stock trading, in the event of an accident, not only customers suffer losses, but securities companies also suffer losses. Therefore, it is necessary to accumulate transaction liability reserves in accordance with the number of transactions and at a predetermined ratio. Using this reserve can ensure payment to customers and preserve the company's credibility.

Securities companies are required to engage in the issuance and trading of securities and other securities-related businesses. Issuing business can be divided into two categories: underwriting business and consignment business. The former means that the securities company purchases all the securities issued by the issuing unit and then sells them to the society; the latter means that the securities company accepts the entrustment of the issuing unit and sells the securities on its behalf. Securities trading can be divided into two types: self-trading and valet trading. The former means that the securities company's own funds or securities are bought and sold for itself, and the difference is earned; the latter is commissioned by the client to use the client's cash or securities to buy and sell for the client. The securities company charges a renewal fee based on a certain percentage of the transaction amount. These are the basic businesses of securities companies. In addition, securities companies also provide other services for securities investors. For example, to keep stocks and bonds safe for securities investors; to provide loans or lease securities to customers who buy and sell securities; to provide customers with free research reports and other information materials.

(2) Investment banks.

The so-called investment banks in the world are different from investment banks and commercial banks in China. They do not operate general bank deposits and loans, but specifically refer to financial institutions mainly engaged in securities business. Therefore, the main business of investment banks is basically the same as that of securities companies. But they also do business that securities companies such as project financing, corporate financial consulting, and venture capital don't.

(3) Trust and investment companies.

Any financial institution that operates trust business and securities business is a trust investment company. Its main businesses are trust business, investment business, credit business and other businesses, and underwriting and trading of securities business are the main contents of its investment business.