A new issue (initial public offering/ IPO) of securities (stock, bonds, etc) that an underwriter has entirely sold to public investors. Afterwards, trading of sold-out, newly-issued securities begins on the secondary market, and ceases to exist in the primary market. For example, when an investor buys some shares of a given company, a middleman, literally an underwriting syndicate, comes in between them.

The syndicate takes on the responsibility for marketing the new issue to potential investors (brokerage houses, institutional investors, and major individual investors), assuming the risk of having a left-over portion of that issue, i.e., being unable to sell the entire issue. In return, the syndicate can do its best to sell the issue at a higher price on the open market. That depends, of course, on its own marketing efforts and expertise.

If the underwriter of a particular initial public offering (IPO) has successfully managed to have the issue wholly absorbed by the market, the so-called assimilation process is said to have completed, and the underwriter retains no unsold securities. And hence, it is no more exposed to risks associated with this particular IPO.