IPO trading on IG: how it works
What is an IPO?
An IPO (initial public offering) is when a private company lists its shares on a public stock exchange for the first time. Once listed, the shares are available to buy and sell through a standard share dealing account.
IPOs can attract significant interest, but early trading is often volatile. Share prices can move sharply in both directions on the day of listing.
Why is there a delay between the IPO and being able to buy shares?
When a company lists, its shares go through an extended auction period. During this time, the first official opening price is being determined.
Until the opening auction is complete, shares cannot be bought or sold through a share dealing account. For US listings, this process typically completes in the hours after the US market opens, which is why shares become available later in the UK afternoon.
Once the auction is complete, shares appear on the platform and you can trade them in the normal way.
When can I trade a newly listed share?
US IPOs: new shares are usually available to buy in share dealing accounts later in the UK afternoon. We cannot confirm an exact time in advance. For large US IPOs, shares have typically become available between 17:30 and 18:30 UK time – but this is not guaranteed and they are not available at US market open (14:30 UK time).
In practice, new listings go through an extended auction period first. Shares only become available for unrestricted dealing once that process completes – typically several hours later.
You may be able to see the shares listed on the platform before this, but they will not be available to trade until the extended auction period ends.
Can I place orders before trading starts?
This depends on which account type you are using.
Share dealing
You can place Limit Day orders from 1pm UK time on the day of the IPO.
- Limit Day (All Session) orders are accepted from 1pm, but will not participate in the IPO opening auction
Limit orders fill at your stated price or better – if the share never trades at that level, the order will expire at the end of the trading day. This means you will not receive the IPO opening price. Your order will only fill if the share reaches your limit price during normal trading after shares become available.
If your limit order does not execute, it means the market did not reach your specified price during the session.
Spread bet and CFD accounts
You can place working orders on pre-IPO spread betting and CFD markets at any time. There is no restriction on when you set these up.
What is a working order?
A working order is a general term for either a stop or limit order to open. Working orders are used to advise your broker to execute a trade when an underlying asset reaches a specific price. This means that your broker knows beforehand how you’d like to trade, so they can make faster decisions.
Working orders are one of several varieties of orders. But, unlike most types of order, working orders are not differentiated by their expiry date. Instead, they can have any length of expiry attached to them, from the same day to good-‘til-cancelled.
What are pre-IPO markets (spread betting and CFDs)?
Before a company lists, IG offers pre-IPO markets on spread bet and CFD accounts. These let you speculate on the company’s total market capitalisation before its IPO takes place.
Important: you are not buying shares. You are taking a position on what the company’s overall market value will be at the close of its first day of unconditional trading. These are separate products – a pre-IPO position does not automatically convert to shares when the company lists.
You can go long if you think the actual market cap will be higher than IG’s price, or go short if you think it will be lower.
You can also go short on a pre-IPO market if you believe the company is overvalued. Shorting is available on spread bet and CFD accounts.
How pricing works:
- IG sets the opening price, reflecting the market’s expected valuation at the time of the IPO.
- Prices move in real time based on client trading activity, company news, and changes to expected valuation.
- Markets are available 24/7 (excluding 10pm Friday to 8am Saturday UK time).
- No overnight charges: there are no overnight holding costs on pre-IPO markets.
How settlement works:
- Your trade settles against the official market capitalisation at the close of the first day of unconditional trading.
- If the company lists outside the UK, the market cap is converted to GBP at the prevailing exchange rate at the close of that day.
- P&L currency: for US-listed IPOs, your profit and loss is calculated in the trade currency (USD) and converted to GBP.
- Each market has an expiry date. If the IPO does not happen by this date, all open positions are closed at the original opening price. No profit or loss is realised on those trades.
The sell price and buy price in the deal ticket do not represent the current market capitalisation directly. They reflect where the market thinks the company will be valued. If you buy, you are taking a bullish position (expecting the valuation to be higher). If you sell, you are taking a bearish position (expecting the valuation to be lower).
For US-listed pre-IPO markets, 1 contract = US$10 per point, with a minimum trade size of 0.1 contracts. Your margin requirement is shown in the platform before you place a trade.
You can find pre-IPO markets in the IPO and Popular Markets watchlists on the IG web platform and app.
What are the risks of trading IPOs?
- IPO dates can change: companies may delay or cancel their listing at any time.
- Volatility on listing day: share prices can move sharply in both directions when trading begins.
- Timing uncertainty: shares may not become available exactly when you expect. The typical window is later in the UK afternoon, but is not guaranteed.
- Leverage amplifies losses: on spread bet and CFD accounts, you can lose more than your initial deposit.
- Settlement risk: pre-IPO trades settle at the close of the first day of unconditional trading, not at the opening price.
- Pre-IPO cancellation: if the IPO does not go ahead by the market’s expiry date, open positions are closed at the original opening price with no profit or loss.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with IG. You should consider whether you understand how these products work, and whether you can afford to take the high risk of losing your money.
Frequently asked questions
Can I buy IPO shares in my ISA or SIPP?
Yes. Where eligible, you can buy newly listed shares through your Stocks and Shares ISA or SIPP account with IG.
What is the minimum amount I can invest?
The minimum investment is 1 share at the current market price at the time of purchase.
What’s the difference between the pre-IPO market and buying actual shares?
In the pre-IPO market, you speculate on the company’s total valuation using a spread bet and CFD account – you do not own any shares. Buying actual shares can only be done through a share dealing account.
When you buy a share, you are purchasing a small ownership stake in the company. The two products are separate and a pre-IPO position will not convert to shares when the company lists.
I can see the shares on the platform but I can’t trade them – what’s happening?
Shares may appear in the platform before they become available to trade. This is normal. The shares are in an extended auction period and will not be available to buy or sell until that process completes – typically later in the UK afternoon for US IPOs.
Will my order get the IPO opening price?
No. Orders placed in a share dealing account will not participate in the IPO opening auction. Your limit order will only fill if the share reaches your specified price during normal trading after shares become available.
What happens if the IPO is delayed or doesn’t happen?
Each pre-IPO market has an expiry date. If the company has not listed by that date, all open positions are closed at the original opening price and no profit or loss is realised on those trades. Any positions you closed before the expiry are unaffected.
Why is the price in the deal ticket different from what I’m reading in the news?
The deal ticket shows IG’s current market price, which reflects the latest client trading activity and market sentiment at that moment. News articles may report a different figure – either from an earlier point in time or as speculation about the post-IPO share price, which is a different measure.
Can I short a pre-IPO market?
Yes. You can take a short position on a pre-IPO spread bet or CFD market if you believe the company’s valuation will be lower than IG’s current price.
Are there overnight charges for holding a pre-IPO position?
No. There are no overnight holding costs on pre-IPO markets.
What currency will my profit or loss be in?
For US-listed IPOs, your profit and loss is calculated in USD (the trade currency) and converted to GBP. The conversion uses the exchange rate at the time of settlement.
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