Indication of interest
Encyclopedia
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. 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). 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. Firms and broker-dealer
s 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
.
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
that demonstrates a buyer's non-binding interest in buying a security in the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
, often before it is available for purchase. IOIs are not required, but when a firm decides to issue one, they are primarily used on two occasions: before an IPO
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
, and before an institution places a block trade
Block trade
A block trade is a permissible, noncompetitive, privately negotiated transaction either at or exceeding an exchange determined minimum threshold quantity of shares, which is executed apart and away from the open outcry or electronic markets...
. Prior to an IPO
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
, 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). During this period, the security is said to be in registration and selling is illegal. The investor's broker
Stock broker
A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...
is then required to provide the investor with a preliminary prospectus
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
. 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. Firms and broker-dealer
Broker-dealer
A broker-dealer is a term used in United States financial services regulations. It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers....
s have the ability to electronically communicate or advertise proprietary
Proprietary trading
Proprietary trading occurs when a firm trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments, with the firm's own money as opposed to its customers' money, so as to make a profit for itself...
or client trading interest in the form of IOIs to the marketplace
Financial market
In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...
, either through their own systems or through dedicated trading platforms, such as a Bloomberg Terminal
Bloomberg Terminal
The Bloomberg Terminal is a computer system provided by Bloomberg L.P. that enables financial professionals to access the Bloomberg Professional service through which users can monitor and analyze real-time financial market data movements and place trades on the electronic trading platform...
.