Legal Definitions - bid wanted

Bid Wanted (BW) is a term used in the securities market to indicate that a dealer is actively seeking offers from potential buyers for a specific security they hold and wish to sell. When a dealer issues a "bid wanted" notice, they are essentially signaling to other market participants that they have a particular stock, bond, or other investment product available and are inviting interested parties to submit their proposed purchase prices (bids).

This practice is common for securities that may not trade frequently on major exchanges, allowing dealers to gauge market interest and find the best possible price for their holdings.

• Example 1: Selling a Block of Less Liquid Stock

  A regional investment firm, acting as a dealer, holds a significant block of shares in a smaller, privately-held company that recently went public but whose stock isn't actively traded on the New York Stock Exchange or Nasdaq. The firm needs to liquidate these shares for a client.

  To find buyers, the firm issues a "Bid Wanted" notice through its trading network. This notice informs other dealers and institutional investors that these specific shares are available and invites them to submit bids, helping the firm determine the current market value and find a buyer for the illiquid stock.

• Example 2: Offloading a Specific Municipal Bond

  A large brokerage firm has a municipal bond in its inventory that was issued by a small town for a local infrastructure project. This bond has a unique maturity date and interest rate, making it less standardized and less frequently traded than larger municipal bond issues. The firm wants to free up capital by selling it.

  The firm's bond desk sends out a "Bid Wanted" notification to its network of institutional clients and other bond dealers. This action prompts interested parties to submit their offers for this particular bond, allowing the brokerage to assess demand and sell the bond at a competitive price.

• Example 3: Disposing of a Corporate Bond from a Smaller Issuer

  An independent financial advisor, who also acts as a limited dealer for certain securities, has a corporate bond from a medium-sized manufacturing company that is not widely followed by major analysts. A client wants to sell this bond before its maturity.

  The advisor uses a "Bid Wanted" mechanism to circulate information about the bond to a specialized network of bond traders. This signals to potential buyers that the bond is available and encourages them to submit bids, helping the advisor find the best possible price for the client's less common corporate bond.