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
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).
During this period, the security is said to be in registration and selling is illegal. The investor's
stockbroker 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
In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
s have the ability to electronically communicate or advertise