A book broker is an underwriter who manages the books of security offerings in a new investment issue, acting as a central repository for information and allowing multiple investors to work together. The book broker can be an individual or an entity with financial management experience.
Bookbroker is an underwriter who maintains and manages the books of security offerings that are offered for sale as part of a new investment issue. This designation is a reference to the bookkeeping process, which is also known as “running” in the industry. While there may be multiple underwriters involved in the problem, only the underwriter or the company that serves as the broker for all underwriting activity is known as the book broker.
One of the main benefits offered by a book broker is that the post serves as a central repository for all information relevant to the design and current state of the art of investing. The book broker functions as the ultimate source of data on the subject. In general, the entity that manages the books has access to updates and other pertinent information before it is made available to the general public.
A book broker also functions as the mechanism that allows multiple investors to work together on a particular issue. For example, when there is a purchase of a corporation that requires the participation of several companies or investors to achieve it, one company is designated as book broker. This partner establishes the line of communication to complete the deal on behalf of all investors and ensures that the interests of each participating party are protected.
It is not unusual for a group of investors to come together to make an investment of some kind. The pool can designate one of its numbers to act as the book broker, establish a reserve pool, and allow the broker to participate in the settlement negotiation on behalf of all participants. In turn, the book broker is accountable to all members of the group or consortium, ensuring they have access to the books and also establishing a consistent schedule for making regular reports to the group at large.
In many cases, the book broker will be an entity with extensive financial management experience, such as an investment bank. However, that is not necessarily the case. Many countries around the world would allow individual investors to function as the driving force behind a deal and function as book brokers for a group of investors. As long as the broker can meet the minimum requirements set forth in the country of origin and is trusted by all participants in the deal, the book broker can be almost anyone.
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