A net transaction in the securities market refers to a transaction where the buyer and seller do not incur any fees or commissions. This typically occurs when an investor buys a new issue of stock.
A new issue refers to a stock or bond being offered to the public for the first time, the distribution of which is covered by Securities and Exchange Commission (SEC) rules. It usually pertains to initial public offerings (IPOs) by previously private companies but can also include additional stock or bond issues by companies that are already public.
Overhang refers to the surplus shares remaining with underwriters when a new issue of shares has not been fully taken up by investors. This situation often results from an under-subscription during a public offering, leaving the underwriters with unsold shares.
The preliminary prospectus, also known as the red herring, is the first document released by an underwriter of a new issue to prospective investors. It provides financial details about the issue but parts of the document may be changed before the final prospectus is issued.
The right of existing shareholders of a corporation, or their transferees, to buy shares of a new issue of common stock before it is offered to the public.
