Pre-IPO trading

Pre-IPO trading, also known as grey market trading, allows you to take a position on a company’s potential share price ahead of its initial public offering (IPO). Unlike investing through an IPO application, you're not buying or applying for shares. You're place a spread bet or contracts for difference (CFD) position based on a synthetic price which reflects market expectations of a potential IPO valuation.

The pre-IPO price can move significantly as new public information and market sentiment evolve. Your trade rolls into the listed share spread bet/CFD once the company lists. The position remains open and you retain control over how long you wish to keep it open, and when to close it.

You can trade once the pre-IPO market is open, usually from when an IPO is announced up until the company lists.

When the company successfully lists, your pre-IPO spread bet or CFD transitions seamlessly into a standard spread bet/CFD on the listed share. The instrument then references exchange-based pricing and normal trading conditions apply. There is no forced settlement or manual intervention required – the position continues under the same listing. Your position remains open and you retain control over when to close it.

If the IPO is cancelled, or the company says it will not go ahead, open positions will be cancelled at the original execution price, so no profit or loss is realised. Any positions that were closed before the cancellation won't be reversed, and so will remain binding.

Yes, you can take a short (sell) position if you believe the company’s share price will fall below our pre-IPO price once the company lists.

Pre-IPO markets can move quickly and may be volatile. It's important to note that there is a risk the IPO opens at a price significantly different from the pre-IPO level. This is known as 'gap risk' and is an inherent feature of pre-IPO trading. The divergence can occur because pre-IPO pricing is based on expectations, while the listing price is determined by the actual IPO process and early exchange trading.

When you trade with leverage, your potential profits and losses are magnified based on the full value of the trade. However, as a retail client, you can't lose more than your account value, due to negative balance protection. If your margin level is insufficient to maintain your position, it may be automatically closed out. Learn more about managing your risk

Upcoming pre-IPO markets will appear in the product library under shares in our platform when available.

Yes. You can close your position during our normal trading hours at any time from when the pre-IPO instrument is made available on our platform until it transitions to the listed share spread bet or CFD at IPO.

The pre-IPO instrument provides synthetic exposure to the expected share price of a company before it lists on a stock exchange. Before listing, prices are based on our assessment of the company’s expected list price, drawing on publicly available information such as:

• The indicative IPO price range, where available

• Valuations of comparable listed companies

• Market conditions and sentiment

Prices are not based on private secondary market transactions and may differ significantly from private market valuations. There is no active underlying market on a company’s shares before it lists, which means there is no exchange-traded reference price that we can use before the IPO. This may have the following implications:

Prices may be volatile

• Spreads may be wider than for other share CFDs

• The product cannot be hedged in the open market

• The IPO may open at a price materially different from the pre-IPO price, potentially exposing you to gap risk and potentially significant losses

Price updates vary by company and depend on how close the IPO date is. As more information becomes publicly available, including updates to the expected price range or demand for the shares, prices may be updated more frequently. Updates may be irregular and pricing may change quickly.

When the company lists, your pre-IPO instrument converts into a standard share spread bet or CFD, depending on which product you're trading. From that point, pricing is based on the underlying exchange-traded share. You can close your position during normal market hours, subject to market conditions. Spreads may initially be wide and volatility may be high while the market establishes a price.