An Overview of IPO Participation

Gregg Jaclin
3 min readOct 7, 2022


A company’s initial public offering is a process of raising capital. It usually takes place in the primary market. The lead underwriter for an IPO is typically a group of banks and brokers. These groups then allocate shares to investors. Buying shares at the offering price in the IPO process is referred to as “participating.” This occurs before the security is listed on the stock exchange.

First Steps

Before being considered for an IPO, you must meet specific eligibility requirements. For instance, you’ll need at least $100,000 in household assets. This includes investments such as stocks, bonds, and retirement accounts.

If you’re still eligible, you must sign up for Fidelity Alerts to keep up with the latest updates regarding the IPO. Before you can start the process of participating in an IPO, you must first read the company’s prospectus. This document contains the details of the company’s business and operations. You can also download and print it from the company’s website.

Aside from meeting the eligibility requirements, you’ll also need to provide a series of qualifying questions to be considered for the IPO. The Financial Industry Regulatory Authority (FINRA) prohibits specific individuals from participating in IPO.

After you’ve answered the qualifying questions, you’ll be asked to indicate an interest in the company. This step will allow you to complete the process and submit your application.

You must have at least $2,000 cash or fully paid securities in your account to indicate an interest in the IPO. An indication of interest determines the number of shares you’re interested in purchasing. You can also enter an optional open interest (IOI) of up to 100 shares during the available application window. This window usually closes a few days after the stock’s final price is determined.

The Process

You’ll receive an email or text message confirming your interest in the company. The notification will include the expected effective date and the pricing of the stock.

If the effectiveness and pricing of the stock are known, this will notify you about the details of the confirmation period.

The notification will also include a notice of allocation sent when the shares reach your account. You can also receive deal-specific updates, such as price range or size changes.

The price range the company and the underwriter have established for the initial public offering is usually released before the first day of trading. This usually happens the evening before the market opens.

After the shares reach your account, you’ll be able to view the status of your allocation. The final prospectus will also be sent after the shares have been allocated. This document contains the same information that was included in the preliminary prospectus. It also includes various amendments that were made to the document.

Certain customers who want to participate in the IPO may be unable to do so. Sometimes, the company will allocate the shares based on a formula that considers the customer’s assets, tenure, and revenue. This method is usually used in cases where the demand exceeds the supply.

Originally published at on October 7, 2022.