Learn about IPOs

If you’re trying to decide which IPOs are right for you, this is the place to start.

Whether you’re a frequent buyer or dipping your toe into the IPO pool for the first time, information and educational tools can help you become more successful. Questrade offers a variety of information to help you learn the basics or take your knowledge to the next level.

What is an IPO?

An IPO (initial public offering) is the process by which a private company goes public for the first time by selling shares of their firm to investors.

You may have heard the term: new issue. That’s more of a general phrase used to describe different kinds of public offerings such as:

  • IPOs
  • Secondary offerings: an additional offer of stocks or bonds by a public company
  • Structured products

What type of IPOs and new issues can I participate in?

There are different types of new issues:

Equity:

  • Canadian large cap
  • Canadian min cap
  • Canadian small cap

Fixed income:

  • Corporate bonds: blue chip, investment grade, and high yield
  • Hybrid: convertible bonds, preferred shares, real estate investment trusts, income trusts, and master limited partnerships (MLPs)

Structured notes:

  • Equity (individual stocks and indexes)
    • Principal protected
    • At risk (your principal is not guaranteed)
  • Hybrid (fixed income, commodities, and other investment sectors)
    • Principal protected
    • At risk (your principal is not guaranteed)

What are structured products?

Structured products are actually a type of financial instrument that combines some of the key investment characteristics of both stocks and bonds.

There are two main types of structured products:

  • Principal-protected notes
  • Principal-at risk notes

Principal-protected notes offer you a guarantee on your original investment if you hold it until maturity. Any added returns, though, are linked to the performance of the underlying security such as a stock, equity index, interest rates, commodity prices, or even currencies. Some structured products are focused on income while others are more focused on growth.

Principal-at-risk notes don’t guarantee your original investment. Your return is linked to the underlying security or group of securities. For the additional risk you are taking, you may generate a higher return.

How do I find out about new IPOs?

The public can find out about IPOs in many ways. Big name IPOs, like the recent listing of Hydro One on the TSX, make front page news. Other smaller issues may be noticed by someone who follows the company or industry.

For our clients, the best way to stay informed is to subscribe to our IPO bulletin, an email sent by our Trade Desk to subscribers the moment a new IPO is announced. The bulletin lists current IPOs and secondary offerings: including the name of the security, industry, category, and date announced.

Signing up for the IPO bulletin is easy! Complete our subscription form and we’ll add you to the list right away.

Subscribe to our IPO bulletin

Join our mailing list and we’ll email you when new IPOs and secondary issues are announced.

SUBSCRIBE

How do you participate in an IPO?

Our IPO Centre gives you instant access to information about IPOs and other new issues from your smartphone or other device. When you see an IPO you like, click or tap the BUY button beside the issue you want, log in, then complete the form.

When we receive your order:

  1. We’ll send you an email to confirm your order
  2. We’ll log your order so it can be filled once the shares or notes are released
  3. We'll adjust the buying power in your account (the amount of money available for trading) based on the amount you told us you want to spend

Once you’ve placed your order, keep in mind:

  • The adjusted buying power assumes you’ll receive all the shares you’ve requested and will be updated after shares are distributed
  • You’re committed to purchasing the shares and will only pay for what you receive
  • You may not receive all the shares you’ve asked for or any at all

Click or tap to buy IPOs

It’s easy to place an order for an IPO or other new issue. View all current new issues and click or tap the BUY button beside the one you like. We’ll send you an email to confirm your order.

VIEW ALL NEW ISSUES

How are shares allocated?

For most traditional IPOs, we use a pro-rata allotment policy. This means that if an IPO is oversubscribed (the number of shares requested is more than we receive), we allocate shares proportionate to the number of shares requested by each client. After that, if there are any shares left over, we allocate them to the client with the largest order first and then continue to the smallest order until all remaining shares are allocated.

How is the price for an IPO determined?

The underwriter (the institution that assists a company with its IPO) and the company decide the price. The price depends on the company, the perceived demand for the shares, and current market conditions. The final price is determined at the same time the shares are made available for distribution.

What is the commission?

None. Nada. Zilch. Buying shares as part of an IPO or secondary issue are commission free.

Subscribe to our IPO bulletin

Join our mailing list and we’ll email you when new IPOs and secondary issues are announced.

SUBSCRIBE

Not a client yet ?

You need a self-directed account to buy shares as part of an IPO or secondary issue. Join us by opening an account.

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