Market opening will be different on the Initial Public Offering (IPO) day.
If you’re planning to trade shares in a US company that has just listed, the first day of trading will be a bit different from what you might expect.
Although the US stock market officially opens at 2:30pm (UK time), the newly listed shares do not usually start trading straight away. Instead, the shares enter what’s called an opening auction period. This is completely normal for US IPOs and part of how the market determines a fair opening price.
During the auction, no one can buy or sell in the normal way. Once the auction completes, the shares will begin trading continuously and you will be able to buy or sell.
Important Information
We do not offer advice on the suitability of an IPO. Like any investment, there are risks and the value of investments can rise and fall, so you could get back less than you put in. Investing is for the long term, typically 5 years or more.
It’s vital you have all the information you need to make an informed decision. A decision to invest should be made solely based on the information in the prospectus and supplementary documentation.
This article is for information only and not personal financial advice. If you’re not sure investing is right for you, a financial adviser can help.
What you might see on the day
Here’s what to expect on the first day of trading.
No live price initially
You may not see a tradable, live share price straight away. There’s nothing wrong, it just means the opening auction is still in progress and the first traded price has not yet been set.
A reference price may be shown
You might see an indicative (or reference) price displayed on the factsheet. This is a guide based on the IPO pricing, but the actual opening price could be higher or lower once the auction completes.
Trading will not be available yet
You will not be able to buy or sell shares in the normal way while the auction is running. This applies to all investors, not just HL clients. No trading takes place on any platform during this period.
The timing is uncertain
The auction can last for several hours. For large, high-profile IPOs, it’s common for the first trade to happen later in the afternoon or into the early evening, UK time. We will not know the exact timing in advance.
What's happening behind the scenes?
While you’re waiting, the exchange is running a carefully managed process to set the first public market price for the newly listed company.
During the auction period, global market participants, including institutional investors, market makers and the IPO underwriters, are submitting buy and sell orders to the exchange.
The exchange brings these orders together to:
Balance supply and demand across all orders
Establish a stable, fair opening price
Help reduce excessive volatility when continuous trading begins
Once enough orders have been matched and a suitable price has been found, the shares will open and begin trading normally.
What can you do if you want to trade?
You cannot trade during the auction itself, but there are steps you can take so that you’re ready to trade as soon as possible.
Submit a fill or kill order
Even though you cannot trade, you can place a fill or kill order. This lets you leave an instruction to buy or sell shares for when the shares become tradeable.
Once the opening auction ends, we will attempt to place your trade. Before this, you can view and cancel your order in ‘Pending Orders’ while the status is still Pending. You’ll receive an email from us confirming the outcome.
Fill or kill orders for SpaceX will be available from 7am on 11 June (the day before it begins trading).
Once trading begins
When the auction completes and the shares begin trading, you can get a live quote and deal online, on the app, or by phone in the usual way. Please be aware that prices can move quickly in the early stages of trading, so a quote may be valid for only a short time.
Before you trade US shares
Before you can buy shares listed in the US, there are a couple of things you need to do.
W-8BEN form: You will need to have completed a W-8BEN form. This reduces the amount of US tax withheld on any dividends or interest you receive. You can complete it online by logging in to your account.
Overseas dealing charges: Trades in US-listed shares are subject to our standard overseas share dealing charges and foreign exchange charges.
Key takeaway
It’s completely normal for there to be a delay between the US market opening and the first trade in a newly listed stock. If you do not see a price or are unable to trade immediately, it just means the opening auction is still underway.
Once the auction completes and a fair opening price has been set, normal trading will begin and you will be able to deal.
In the meantime, consider submitting a fill or kill order so you’re ready to trade as soon as the shares go live.
Frequently asked questions
Is dealing unavailable only for HL clients during the auction?
No. The opening auction is an exchange-level process. No one can trade the shares in the normal way until the auction completes and the first traded price is set. This applies to all brokers and all investors worldwide.
How long does the auction last?
There’s no fixed duration. For high-profile IPOs, the auction may last several hours after the market opens. We will update you as soon as the shares become tradable.
What is a fill or kill order?
It’s an instruction to buy or sell at a price you set. If the price is reached (or better) when the market can trade, we will try to place your order. If not, the order is automatically cancelled. You can view and cancel pending orders by logging into your account.
What accounts can I use?
You can buy or sell US-listed shares in any of our standard investment accounts, like a Stocks and Shares ISA, Self Invested Personal Pension (SIPP) and Fund and Share Account.
Do I need to do anything before I can trade?
Yes. Before you can buy US-listed shares you will need to have completed a W-8BEN form. You can do this online by logging in to your account.