Which component of the underwriting spread is paid to broker-dealers who sell shares to their retail clients but are not members of the underwriting syndicate?

Why C — The selling concession (or reallowance)

The reallowance is the portion of the selling concession that can be paid to non-syndicate broker-dealers who sell shares to their clients. The selling concession itself is the largest component of the spread and compensates firms for their selling efforts. The management fee goes to the lead manager(s) for structuring and managing the deal, while the underwriting fee compensates syndicate members for their underwriting risk. Non-syndicate dealers receive only the reallowance, which is smaller than the full selling concession.