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Frequently Asked Questions
  Does Nasdaq require information about the allocation of shares in an Initial Public Offering?
Identification Number 1850

Nasdaq Listing Rules have specific measures designed to help ensure that listed securities will attract market attention and develop sufficient public float, investor base, and trading interest to provide the depth and liquidity necessary to promote fair and orderly trading. 

Recently, there have been instances of unusually high price spikes immediately following the pricing of certain initial public offerings (IPOs) on U.S. exchanges. In many instances, the IPO securities that are the subject of these extreme price spikes then experience price declines to a level at or below the offering price.  The phenomenon, among many things, may be attributable to the lack of liquidity and/or supply in the opening trade, or in continuous trading on the day of, or days immediately following, the listing.  As such, Nasdaq may ask additional questions about the allocation of shares in an IPO to help confirm that the underlying objective of these Listing Rules is satisfied.

Specifically, on a case by case basis, Nasdaq may request that companies and their underwriters provide an expected allocation list, describing the names and locations of investors anticipated to receive shares in the allocation, along with a representation as to whether there are any formal or informal policies that could prevent shares allocated to these accounts from being available to trade on the first day of trading.  In addition, Nasdaq may ask the company to represent that the company and its affiliates are not parties to any scheme or arrangement through which shareholders and potential shareholders are being loaned or given money to purchase shares in the IPO, and that the company is not aware of any such arrangement even if not a party to it.

In cases where Nasdaq has requested these expected allocation lists, Nasdaq will also request information about the final allocation before it certifies the company‚Äôs Form 8-A filed with the SEC.  In addition, promptly following pricing, the underwriters and syndicate firms will be required to provide account-level information about the recipient of shares.

In reviewing the information provided, and in determining whether to approve the listing and certify the Form 8-A, Nasdaq will consider the concentration of shareholding in the IPO, any restrictions the shares may be subject to on the first day of trading, geographic location of the accounts, and any regulatory concerns identified with any underwriter, syndicate or selling group member, or accounts' allocated shares.

Publication Date*: 11/17/2022 Mailto Link Identification Number: 1850
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