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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.