What is the Sell Side?

//What is the Sell Side?
What is the Sell Side? 2017-10-10T06:27:42+00:00

Definition: Sell-side refers to the side of the financial industry that makes money through fees and commission by creating, promoting, and selling financial instruments.

What Does Sell Side Mean?

What is the definition of sell side? Investment banking, sales and trading, equity research, commercial banking, and advisory services are all part of the sell-side of the financial industry. In a broader classification, the sell-side includes the stock, bond, and forex markets. Sell-side companies create products and services for the buy-side of the industry, and they charge a fee for the financial product, the cost of trading and the cost of research.

For instance, the sell-side of Wall Street includes investment bankers and market makers who facilitate the trading of stocks and make the market more liquid. Also, the sell-side offers stock recommendations, target prices and opinions on the public market.

Let’s look at an example.

Example

Company A is an investment bank headquartered in Chicago, IL. The investment bank has a vast customer base, consisting of corporate clients, mostly in the energy and construction sectors, mutual funds, hedge funds, government organizations and high net worth individuals.

The services that the investment bank offers include advising clients on mergers & acquisitions, raising capital and managing risk, financing and investment management services, trading stocks, commodities, derivatives and related financial instruments, and offering equity research reports. With respect to risk management, the investment bank assists corporations and governments in effectively managing risk and provides adequate research on economic trends to assist policy makers and businesses in making informed business and economic decisions.

The sell-side of the investment bank is selling shares and financial instruments to individual and institutional investors with the aim of making money from the relevant commissions and fees. It assists companies with their IPOs, places bond issues and helps its customers with a range of financial transactions.

Summary Definition

Define Sell-Side: Sell side means the companies on Wall Street that make stocks and other instruments available for public purchase.