Clause included in an underwriting agreement that protects the underwriter from paying any type of fee should he/she decide to cancel the agreement. A market out clause only eliminates the cancellation penalty if the cause for cancellation meets certain circumstances outlined in the agreement. If an underwriter chooses to cancel the contract for reasons that do not fall under those covered in the clause, a penalty may be assessed.

Copyright©2009 by InvestorWords.com. ALL RIGHTS RESERVED.

Reproduction of all or part of this glossary and/or this page, in any format, without written consent is prohibited. If you have questions about this dictionary please feel free to contact us feedback\@\investorguide.com