Bulge Bracket

What Is a Bulge Bracket?

"Bulge bracket" is a shoptalk term that depicts the company or companies in an underwriting syndicate that issued the largest number of securities on another issue. The bulge bracket is generally the primary group listed on the tombstone — a print commercial of another issue.

Bulge bracket is likewise a catchall term for the most beneficial global investment banks in the world, whose banking clients are typically large institutions, corporations, and states. Then there are store banks — more modest, more youthful banks that have practical experience in certain areas of investment banking and handle more modest arrangements.

Understanding Bulge Bracket

As the largest firm in an underwriting syndicate, a bulge bracket may likewise act as the manager or co-manager of the underwriter syndicate. In the investment banking industry, syndicates are framed so that underwriting companies can share the risks and profits associated with another security issue with different firms. The larger the new issue, the more firms are probably going to partake in the new issue through syndication.

The term bulge bracket as a catchall for investment banks is less utilized since the financial crisis, being supplanted with the terms tier one, tier two, or tier three.

Types of Bulge Bracket

Past firms being engaged with underwriting syndicates, bulge bracket may likewise allude to major investment banks. Bulge bracket investment banks as a rule give both financing and advisory banking services, notwithstanding market making, sales, and research for different financial products. The bulge bracket is generally the book-running manager or the bank that controls the allocation of securities to investors. It is listed in the larger print over all others and on the prospectus cover.

As a catchall term for this class of large global investment bank, "bulge bracket" usually alludes to Bank of America Merrill Lynch, Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank, JPMorgan Chase, Citigroup, Morgan Stanley, and UBS. As enormous multinational banks, these investment banks offer a wide range of services to clients and many likewise run retail banking operations.

Since the global financial crisis of 2008, "bulge bracket" as a catchall term has been to some degree outdated by the practice of alluding to investment banks as "tier one," "tier two," or "tier three" investment banks. The main tier one investment bank may be JPMorgan Chase since it positions first or second globally across most product areas. Tier two would be Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank, and Citigroup. Instances of tier three would be UBS, BNP Paribas, and SocGen.

Features

• The bulge bracket is typically the primary name (or group of names) on the print ad of the new issue and may likewise be the manager of the underwriter syndicate.
• Bulge bracket is the major company (or companies) engaged with an underwriting syndicate for another issue of securities.
• The term can likewise allude to the top investment banks in the industry, like JPMorgan Chase and Goldman Sachs.