passive market making

Passive Market Making

A situation in which an underwriter makes a bid in the secondary market to buy shares in a new issue for which the underwriter is responsible before it is fully distributed. In passive market making, the underwriter is now allowed to enter a higher bid than any competing investors. See also: Stabilization period.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

passive market making

The offering by a market maker to purchase a firm's securities at the same time the market maker is acting as an underwriter of the securities in a secondary offering. The market maker is not permitted to offer a higher bid than a competing non-underwriting market maker.
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.