market-out clause(redirected from Market-Out Clauses)
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.
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.