Sell side

Sell side is a term used in the financial services industry. The three main markets the sell side sells these entities on would be the stock, bond, and foreign exchange market.It is a general term that indicates a firm that sells investment services to asset management firms, typically referred to as the buy side, or corporate entities. One important note, the sell side and the buy side work hand in hand and each side could not exist without the other. These services encompass a broad range of activities, including broking/dealing, investment banking, advisory functions, and investment research.

In the capacity of a broker-dealer, "sell side" refers to firms that take orders from buy side firms and then "work" the orders. This is typically achieved by splitting them into smaller orders which are then sent directly to an exchange or to other firms. Sell side firms are intermediaries whose task is to sell securities to investors (usually the buy side i.e. investing institutions such as mutual funds, pension funds and insurance firms).

Sell side firms are paid through commissions charged on the sales price of the stock to its customers because the firm handles all the details of the trade on the customers behalf.Another source of money would be the idea of a spread. A spread is the difference when one sell side firm sells to a client and then goes on to sell the security to another client. Clients on the sell side can be high-net-worth individuals or institutions that include retirement funds for cities or states, as well as mutual funds. Sell side firms employ research analysts, traders and salespeople who collectively strive to generate ideas and execute trades for buy side firms, enticing them to do business.

Sell side analysts have many roles. Sell side analysts rank stocks on a regular basis with three main options: buy, sell and hold. Part of the research analyst's job includes publishing research reports on public companies, these reports analyze their business and provide recommendations on the purchase or sale of the stock.Many times research analysts on the sell side cover an entire fund with a specific purpose or devoted to a specific sector. Sometimes a different approach is taken where by multiple committees are in charge of different parts of the investment making process. Sell side analysts generally get their information for their reports from a variety of sources including public and private sources. The research reports ultimately published contain earnings forecasts, future prospects and recommendations as previously mentioned. In addition to the aforementioned, sell side analysts have the responsibility to take time and develop relationships with their clients as well as the companies they are researching. There has been research into the relationship between the quality of the research and the amount of capital that the firm collectively raises for its many clients. Many research analysts focus on one particular sector or industry such as telecom, technology, healthcare, among many others. Sell side analysts are responsible for creating a pitch, usually in the form of a book, that are then presented to prospective clients usually for new stock.

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