What is the western account?

Subscribing, which includes the sale of new shares or bond problems to large investors, is one of the most profitable securities business components. As a subscriber, the investment broker assumes a fair amount of risk of a new problem, because he agrees to pay the publisher a certain amount of money regardless of whether stocks or bonds are on the market. To settle this risk, many companies will conclude an agreement on syndication, in which a group of subscribers agree to share risk and reward for subscribing a new problem. The Western account, also known as a divided account, is one of the main forms of the syndication agreement in which each subscriber agrees to take responsibility for only part of the problem he has in his own inventory. According to the Western account conditions, the subscriber is not responsible for the unsold part of the problem in the stocks of other subscribers in the Syndicate.

The second form of agreement on the syndication commonly used is an eastern account. Unlike the western account of the clasThe new Syndicate share responsibility for the whole problem, including all unsold parts of each assignment. Syndic Application Liability for unsold shares or bonds based on the percentage of participation of each Syndicate member. For example, Company A and Company B agree with 50 % participation in the Subscription Syndicate. Although the company A sells its entire part, it is still 50 % responsible for the unsold part of the B.

allocation

In addition to risk sharing, other important benefits of the Eastern or Western account of the subscriber are that it allows smaller companies to produce enough associated capital to buy a problem and expand distribution flows to potential investors. Most syndicates are managed by one of the companies involved and the most common arranging is the Eastern Account. Although there are fewer risks in the Western account, this form of agreement between subscribers (AUA) also limits significant profits from the difference between purchasing and selling prices of the problem. If the subscriber can attend an Eastern account with a consortium meaningInvestment companies with professional knowledge in the field of market valuation and trading in securities in the secondary market, can contribute to the percentage of profits from the entire edition while strengthening relatively small amounts of money in the investment.