Excessive broker trading in a discretionary account. underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread. Bloomberg Financial Dictionary

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overtrade o‧ver‧trade [ˌəʊvəˈtreɪd ǁ ˌoʊvər-] verb [intransitive]
1. ACCOUNTING COMMERCE if a business overtrades, it does not have enough working capital (= available cash) to pay its creditor S (= people and organizations it owes money to) and employees:

• Directors of a tour operating company have to give financial guarantees which will be used if the company overtrades and then fails.

2. FINANCE if a broker overtrades, they buy and sell investments for customers more often than they should, in order to increase the amount of commission they earn; = CHURN
— overtrading noun [uncountable] :

• Before expanding, arrangements must be made for the higher cash requirements needed for this. If not, there is a risk of overtrading.

• The securities house imposed fines for overtrading habits that in fact were encouraged.

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overtrade UK US /ˌəʊvəˈtreɪd/ verb [I]
FINANCE, PRODUCTION if a company overtrades, it sells more products than it can make, or more than it can afford to produce: »

The company was overtrading and running a risk of collapsing.

STOCK MARKET to buy and sell shares too often: »

My broker was overtrading in order to make a higher commission.

overtrading noun [U]

One big reason why funds underperform is overtrading.

Financial and business terms. 2012.

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Look at other dictionaries:

  • Overtrading — is a term in financial statement analysis. Overtrading often occurs when companies expand its own operations too quickly (aggressively) [1]. Overtraded companies enter a negative cycle, where increase in interest expenses negatively impact net… …   Wikipedia

  • Overtrading — O ver*trad ing, n. The act or practice of buying goods beyond the means of payment; a glutting of the market. [1913 Webster] …   The Collaborative International Dictionary of English

  • Overtrading — 1. Excessive buying and selling of stocks by a broker on an investor s behalf in order to increase the commission the broker collects. This situation has been known to arise when brokers are pressured to place a newly issued security underwritten …   Investment dictionary

  • overtrading — Trading by an organization beyond the resources provided by its existing capital. Overtrading tends to lead to liquidity problems as too much stock is bought on credit and too much credit is extended to customers, so that ultimately there is not… …   Big dictionary of business and management

  • overtrading — The undertaking of business activity that results in *cash flow problems and potential *insolvency Overtrading is characterized by *working capital problems arising from the simultaneous (i) slow receipt of cash receipts relating to *accounts… …   Auditor's dictionary

  • overtrading — v. trade beyond one s financial capability or the demand in the market …   English contemporary dictionary

  • overtrading — Trading in which a business has expanded too rapidly thus putting a strain on its financial resources. This can lead to liquidity problems …   Accounting dictionary

  • overtrading — /ˌəυvə treɪdɪŋ/ noun a situation where a company increases sales and production too much and too quickly, so that it runs short of cash …   Dictionary of banking and finance

  • overtrading — overtradˈing noun • • • Main Entry: ↑over …   Useful english dictionary

  • Чрезмерное расширение деятельности — OVERTRADING Развертывание масштабной предпринимательской деятельности при отсутствии достаточного оборотного капитала. Подобная ситуация часто приводит к проблемам с ликвидностью, и компания оказывается неспособной платить поставщикам и… …   Словарь-справочник по экономике

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