An indication of interest (IOI), sometimes expression of interest (EOI), is an expression in
finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
that demonstrates a buyer's non-binding interest in buying a security in the
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
, 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
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
, and before an institution places a
block trade
A block trade is a high-volume transaction in a security that is privately negotiated and executed outside of the open market for that security. Major broker-dealers often provide "block trading" services—sometimes known as "upstairs trading de ...
.
Underwriting
Prior to an
IPO
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
, an IOI demonstrates a conditional, non-binding interest in buying a security that is currently awaiting regulatory approval (securities in the United States must be cleared by the
Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
).
During this period, the security is said to be in registration and selling is illegal. The investor's
stockbroker
A stockbroker is a regulated broker, broker-dealer, or registered investment adviser (in the United States) who may provide financial advisory and investment management services and execute transactions such as the purchase or sale of stocks an ...
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/dealers have the ability to electronically communicate or advertise