The differential between the price paid to the issuer of a security (stock, bond, etc.) and the price at which an investment bank initially offers the security to the public. This spread includes many components: income derived from the sale of securities, commission, and takedown. This spread represents the underwriters’ and selling groups’ compensation for the costs and risks associated with the selling process (which include one or more of the following: management underwriting services, underwriting services, selling concession services). The two parties divide the spread as per agreement.

It has many other terms including: spread, underwriters’ discount, gross spread, production, etc.