Bulge bracket
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Bulge bracket is a phrase associated with finance, in particular the investment banking industry. It has both a common meaning and a particular financial meaning.
In common phraseology
In common use, the term 'bulge bracket' refers loosely to the group of investment banks considered to be the largest and most profitable in the world, as measured by various league table standings. Since the criteria for this judgement are unclear, there is often debate over which banks form part of the bulge bracket (debate that is unsurprisingly heavily biased in favour of firms that one has professional connections with).
Banks considered part of the Bulge Bracket
Commonly, Goldman Sachs and Merrill Lynch are considered the traditional examples. In recent years, Bear Stearns, Citigroup, Morgan Stanley, Credit Suisse, JPMorgan Chase, UBS and Lehman Brothers are considered to have joined the U.S. bulge bracket. Ultimately it is a subjective term and may apply to anywhere between the top 3 and top 10 or so global investment banks, depending on the criteria used.
In finance
In finance, the term 'bulge bracket' refers to the first group of investment banks listed on the "tombstone" (advertisement) notifying the public of a financial transaction or deal. For example, the group of firms in an underwriting syndicate (a group of investment banks) who are responsible for selling the largest amounts of the stock to investors, will be listed first in the tombstone and hence referred to as 'bulge bracket'.
The term is thought to have originated from tombstone advertisements after the late 1970's that contained very large numbers of firms, causing the advert to 'bulge out'. This oversubscription was a result of firms vying for prestige, an important asset in the banking world. However, as a result of it the term fell into disuse as tombstones became less important. It has recently been resurrected to refer to underwriters.
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