Glossary
Sell side
The banks and brokers that create, underwrite, trade and research securities for clients, and the analysts whose ratings and price targets they publish.
On this page
The sell side is the part of the financial industry that makes securities available to others: investment banks, broker-dealers and market makers. They underwrite new stock and bond issues, execute trades for clients, make markets, and publish research. The name comes from the job: these firms sell products and services, while the buy side (mutual funds, pension funds, hedge funds, insurers) buys them to manage money.
How it works
A large bank earns sell-side revenue from several desks at once. Its capital-markets team helps a company run an IPO and collects an underwriting fee. Its trading desk earns spreads and commissions. Its equity research department covers a list of companies, builds earnings models, and issues ratings such as buy, hold or sell along with a 12-month price target.
What to keep in mind
Research is not given away for its own sake. It attracts trading business and investment- banking clients, which creates a built-in conflict. US rules respond to that: FINRA Rule 2241 separates research from banking, limits who can influence a report, and requires disclosure of conflicts, and analysts must certify that a report reflects their own views. Even so, sell-side ratings lean positive; "sell" calls are a small minority in most coverage lists. Treat a rating as one input, read the reasoning behind it, and watch how estimates change over time rather than any single headline call.