A "with recall" quote in the municipal bond market refers to a dealer's offer to sell a bond at a specified price for a limited time, usually around one hour. During this period, the dealer has the right to reclaim the bonds and cancel the sale option. This practice allows dealers flexibility in managing their inventory and responding to market changes.
This term is primarily used in the context of municipal bonds, which are debt securities issued by local governments or their agencies. In legal practice, it pertains to the trading and quoting of bonds, affecting how transactions are structured and executed. Understanding "with recall" quotes is essential for investors, brokers, and legal professionals involved in securities law, finance, and investment management.
Here are a couple of examples of abatement:
(Hypothetical example) A municipal bond dealer quotes a bond at $100, valid for one hour. During this time, if the dealer decides to recall the bond, the investor cannot purchase it at the quoted price.
| Term | Definition | Key Difference |
|---|---|---|
| Firm Quote | A price at which a dealer agrees to buy or sell a security without the option to recall. | Unlike a "with recall" quote, a firm quote cannot be revoked once given. |
| Option to Buy | A contract granting the buyer the right, but not the obligation, to purchase a security at a predetermined price. | This does not include the dealer's right to recall the security as in a "with recall" quote. |
If you encounter a "with recall" quote, consider the following steps:
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It refers to a dealer's offer to sell a bond at a specified price, which can be revoked during a set time period.