market-out clause

(redirected from Market-Out Clauses)

Market-Out Clause

A clause in some underwriting agreements abolishing the agreement under certain, defined circumstances. For example, if the economy suddenly enters a severe recession, or the stock market falls 25%, it is unlikely that investors will be interested in a risky IPO. The market-out clause could then absolve the underwriting syndicate of its responsibility without penalty.

market-out clause

An addition to an underwriting agreement that permits the underwriters to opt out of their commitment to distribute securities in the event of serious market disruptions.