overtrading


Also found in: Dictionary, Wikipedia.
Related to overtrading: overcapitalisation

Overtrading

Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread.

Overtrade

1. To make both buy and sell orders through different brokers to create the impression of increased interest in a security and thereby raise the price. This is a form of price manipulation and is forbidden by the Securities Exchange Act of 1934. It is less formally known as churning.

2. In brokering, to make more trades on a client's holdings than are necessary in order to maximize commissions. Overtrading is illegal.

overtrading

a situation in which a firm expands its production and sales without making sufficient provision for additional funds to finance the extra WORKING CAPITAL needed. Where this happens the firm will run into LIQUIDITY problems and can find itself unable to find the cash to pay suppliers or wages. See also WORKING-CAPITAL RATIO, CURRENT RATIO, CASH FLOW.

overtrading

a situation where a FIRM expands its production and sales without making sufficient provision for additional funds to finance the extra WORKING CAPITAL needed. Where this happens, the firm will run into LIQUIDITY problems and can find itself unable to find the cash to pay suppliers or wages. See CASH FLOW.
References in periodicals archive ?
When you look back statistically and say if those malls are overtrading today, then there's a case to be made to almost double the space that's available in terms of retail, just to handle the tourist trade.
Following a broad economic history of Asia from 1500 to the present, chapters examine the impact of the 2008 financial crisis and its global aftermath; policy responses to the crisis in the region and in Japan, China, and Russia specifically; issues of export-led development, Chinese overtrading, counter-crisis trade expansion, and business cycle decoupling; lessons for Asia from the BRIC countries (the rising economic powers of Brazil, Russia, India, and China); the implications of the Eurozone crisis and global financial imbalances; and intra-Asian stratification.
Ad agencies are a very soft target and hence easily exploited by clients, who in any case are overtrading and strapped for working capital," said Tanvir Kanji, who heads Inca Tanvir Advertising.
The "real crunch" will come when interest rates start to climb and companies that retrenched top see out the recession try to grow again and find themselves overtrading.
Sometimes it pays to stay small - too rapid growth can lead to overtrading and business failure.
Overtrading appears to be affecting the industry as 737 significant players chase sales at the expense of profitability.
The business opened but got into an overtrading situation.
The Elements of Investing hacks away at all the overtrading and over thinking so predominant in the hyperactive thought patterns of the average investor.
The first flush of post-recession expansion generated plenty of cash for businesses, but now some are experiencing the sideeffects of growth, including overtrading and late payment.
Overtrading after a recession is the biggest problem SMEs face.
Traditionally, each time the economy recovers from a recession or downturn, a large number of businesses fall victim to overtrading and end up failing in what should be good times, despite having survived years of bad.