Indication of interest: Difference between revisions
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An '''indication of interest''' (IOI) is an expression in [[finance]] that demonstrates a buyer's non-binding interest in buying a security in the [[stock market]], often before it is available for purchase.<ref name="ipedia" /> IOIs are not required, but when a firm decides to issue one, they are primarily used on two occasions: before an [[Initial public offering|IPO]], and before an institution places a [[block trade]]. Prior to an [[Initial public offering|IPO]], an IOI demonstrates a conditional, non-binding interest in buying a security that is currently is awaiting regulatory approval (securities in the United States must be cleared by the [[Securities and Exchange Commission]]).<ref name="ipedia">{{cite web|url=http://www.investopedia.com/terms/i/ioi.asp|title=Indication of Interest - IOI|publisher=Investopedia.com|accessdate=6 January 2010}}</ref> During this period, the security is said to be in registration and selling is illegal. The investor's [[stock broker|broker]] is then required to provide the investor with a preliminary [[Prospectus (finance)|prospectus]]. The IOI remains open-ended and is not a commitment to buy. |
An '''indication of interest''' (IOI), sometimes '''expression of interest''' (EOI), is an expression in [[finance]] that demonstrates a buyer's non-binding interest in buying a security in the [[stock market]], often before it is available for purchase.<ref name="ipedia" /> IOIs are not required, but when a firm decides to issue one, they are primarily used on two occasions: before an [[Initial public offering|IPO]], and before an institution places a [[block trade]]. Prior to an [[Initial public offering|IPO]], an IOI demonstrates a conditional, non-binding interest in buying a security that is currently is awaiting regulatory approval (securities in the United States must be cleared by the [[Securities and Exchange Commission]]).<ref name="ipedia">{{cite web|url=http://www.investopedia.com/terms/i/ioi.asp|title=Indication of Interest - IOI|publisher=Investopedia.com|accessdate=6 January 2010}}</ref> During this period, the security is said to be in registration and selling is illegal. The investor's [[stock broker|broker]] is then required to provide the investor with a preliminary [[Prospectus (finance)|prospectus]]. The IOI remains open-ended and is not a commitment to buy. |
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For large trades of newly-issued securities, different from a pre-IPO indication, an indication of interest are expressions of trading interest that contain one or more of the following elements: the security name, whether the participant is buying or selling, the number of shares, capacity and/or price of the purchase or sale.<ref name="FINRA">{{cite web|url=http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p118779.pdf|title=Regulatory Notice 09-28|date=November 2009|publisher=[[Financial Industry Regulatory Authority]] (FINRA)|accessdate=6 January 2010}}</ref> Firms and [[broker-dealer]]s have the ability to electronically communicate or advertise [[proprietary trading|proprietary]] or client trading interest in the form of IOIs to the [[financial market|marketplace]], either through their own systems or through dedicated trading platforms, such as a [[Bloomberg Terminal]]. |
For large trades of newly-issued securities, different from a pre-IPO indication, an indication of interest are expressions of trading interest that contain one or more of the following elements: the security name, whether the participant is buying or selling, the number of shares, capacity and/or price of the purchase or sale.<ref name="FINRA">{{cite web|url=http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p118779.pdf|title=Regulatory Notice 09-28|date=November 2009|publisher=[[Financial Industry Regulatory Authority]] (FINRA)|accessdate=6 January 2010}}</ref> Firms and [[broker-dealer]]s have the ability to electronically communicate or advertise [[proprietary trading|proprietary]] or client trading interest in the form of IOIs to the [[financial market|marketplace]], either through their own systems or through dedicated trading platforms, such as a [[Bloomberg Terminal]]. |
Revision as of 16:44, 1 October 2010
An indication of interest (IOI), sometimes expression of interest (EOI), is an expression in finance that demonstrates a buyer's non-binding interest in buying a security in the stock market, often before it is available for purchase.[1] IOIs are not required, but when a firm decides to issue one, they are primarily used on two occasions: before an IPO, and before an institution places a block trade. Prior to an IPO, an IOI demonstrates a conditional, non-binding interest in buying a security that is currently is awaiting regulatory approval (securities in the United States must be cleared by the Securities and Exchange Commission).[1] During this period, the security is said to be in registration and selling is illegal. The investor's broker is then required to provide the investor with a preliminary prospectus. The IOI remains open-ended and is not a commitment to buy.
For large trades of newly-issued securities, different from a pre-IPO indication, an indication of interest are expressions of trading interest that contain one or more of the following elements: the security name, whether the participant is buying or selling, the number of shares, capacity and/or price of the purchase or sale.[2] Firms and broker-dealers have the ability to electronically communicate or advertise proprietary or client trading interest in the form of IOIs to the marketplace, either through their own systems or through dedicated trading platforms, such as a Bloomberg Terminal.
References
- ^ a b "Indication of Interest - IOI". Investopedia.com. Retrieved 6 January 2010.
- ^ "Regulatory Notice 09-28" (PDF). Financial Industry Regulatory Authority (FINRA). November 2009. Retrieved 6 January 2010.