what is the function of registars and banckers who participate in an ipo?

Question

related to stock market

Answer 1

I don't know what you mean by "registars" -- are you referring to the fact that a company has to register with the SEC before going public? If so, it is part of the process to ensure that investors receive as much information about the new companies as possible.

As for the bankers, their primary role is to find buyers for the stock. A syndicate of several banks is formed to market the securities. They go on a 30-day "road show" where they and senior management from the firm visit with potential buyers. They drum up interest in the stock.

After selling the stock and taking the firm public, these banks then usually act as market-makers in the stock -- meaning that they agree to buy from people who want to sell and sell to people who want to buy.

They take about 7% of the total amount raised as their fees.