Primary Dealers

A Primary Dealer is a financial intermediary that plays a significant role in the Initial Public Offering (IPO) process by facilitating the distribution and underwriting of IPO shares. Primary dealers are typically large financial institutions or banks that are authorized to trade directly with the government or the company issuing the shares.

In the context of an IPO, primary dealers have the following key roles:

1. Underwriting: Primary dealers may agree to underwrite the IPO, guaranteeing the sale of a certain number of shares at a specified price.
2. Distribution: They help in distributing shares to institutional investors and sometimes to retail investors.
3. Market Making: After the IPO, primary dealers may engage in market-making activities, ensuring that there is liquidity in the secondary market for the IPO shares.