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What is a Bulge Bracket?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 November 2016
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Bulge brackets have to do with the process of underwriting. Essentially, the bulge bracket is a collective term used to identify the investment firms in an underwriting syndicate that manage to place the largest number of issues with various investors. This ability to place a larger number of shares and securities in a given campaign is highly regarded and can lead to a great deal of excellent publicity for the firms involved.

There are several advantages to being part of a bulge bracket. One of the immediate benefits is earning a prominent spot on the details of the security issue. An accepted tradition within the investment process is listing the members of the investment syndicate for an issue in the advertising that announces the completion of the transactions. Referred to as the tombstone for the issue, this advertising will give prominence to the firms that have earned the right to be included in the bulge bracket, by featuring their names first in the ad detail. The tombstone can be a valuable means of securing publicity for the firm within the investment community, with no extra cost for the advertising on the part of the bulge bracket firms.

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Along with the free publicity, the firms included in the bulge bracket also earn the right to incorporate the accomplishment into their own advertising efforts. Since the honor of being included in a bulge bracket implies that the firm is aggressive in securing investors for an issue, including this detail in promotional brochures, media advertising, and presentations to prospective clients is a sound business move. Recognition as a bulge bracket firm will enhance the reputation of the underwriting firm, and open doors that might have been closed under different circumstances.

While being featured as part of a bulge bracket for one issue is an accomplishment, it is important to keep the momentum going. As an underwriting firm continues to be featured in the bulge bracket for a number of different issues, the ability of the firm to attract new clients, as well as maintain current customers, will continue to grow. The enhanced reputation, and the business connections that come with the status, will ultimately serve not only the best interests of the firm, but also for the clients of the firm as well.

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