Are you someone who wants to sell your shares immediately after the listing? Do you need clarification about at what time IPO can be traded? Here are the complete details of IPO listing day trading rules and regulations and how you can do that.
The pre-open session for an IPO is conducted for 45 minutes from 09:00 AM. There is no actual trading, but traders see an indicative price during this time. Software that looks at demand and supply helps in deciding this indicative price.
Whatever orders you place during this time are ‘limited orders’. Trading takes place at 09:45. Trading of all the orders that investors place in this time slot takes place at the same price. This is the main difference between normal trading and a pre-open IPO session. This price is called the listing price and is executed at 9:45.
The circuit filters in this market are also different from the normal market. In the usual market, circuit filters can vary from 5% to 20%. On the contrary, the pre-opening session has 25% upside and a 25% downside.
Price Determination of Shares
Boards determine the opening price of shares through the demand and supply mechanism. The equilibrium price is decided after viewing the response of buyers and sellers. This equilibrium price is determined as the opening price for the day.
Listing Day of an IPO
An IPO goes on for three to ten days. After this process is over, the company lists its shares in the stock exchange market. The IPO listing day trading rules according to its timings are –
9:00 to 9:45 a.m. – The company determines the opening prices of the shares. It also matches the orders and confirms the trades during this time.
Order collection, modification, and cancellation happen during this session. One can place all kinds of orders during this time frame. In the end, Exchange matches all the orders and confirms all the trades.
9:55 AM to 10:00 AM – This is known as the buffer period. It helps transition between the pre-open call auction and the ongoing trading session.
10:00 AM to 3:30 PM – New listing and re-listed scrips happen during this time. All unmatched orders move to the next sessions.
Thus, pre-open sessions are a great way to sell and buy IPO shares. It allows you to earn a high profit. Oversubscribed companies usually show an increase of 10-25% from their cut-off price. Pre-open sessions allow you to buy the shares at a lower price and then sell them in the live market.
Understanding the pre-open market is difficult, but once you get a hold of it, you can easily earn high profits through this market.