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Finance Dictionary and Glossary of Investment Terms
A process that allows a market maker to be both underwriter and buyer of a company's securities in a secondary public offering.
A process that allows a Market Maker firm to be both underwriter and buyer of a company's securities in a secondary public offering. A underwriting Market Maker may bid for the security during the issue's cooling-off period if its bid is no higher than a competing, non-underwriting, Market Maker's. Before the Securities and Exchange Commission adopted passive market-making in 1993, Market Makers were required to withdraw from solicitation and market-making activities during the cooling-off period. (See Market Maker, secondary offering, underwriter, cooling-off period)