Freeriding and Withholding

Definition - What does Freeriding and Withholding mean?

Freeriding and Withholding is the withholding of a new issue of securities offered by a broker dealer for the benefit of the brokerage firm or an employee.

Testopedia explains Freeriding and Withholding

When a new issue of securities comes to market and are in high demand the securities often trade at an immediate premium in the secondary market. This is known as a "hot issue". The broker dealer underwriting the issue must make a full and complete offering of the securities to the public and may not withhold the securities for its own account or for the account of its employees.

Connect with us

Testopedia on Linkedin
Testopedia on Linkedin
Testopedia on Twitter

Sign up for Testopedia's Free Newsletter!