Nasdaq Rolls Out IPO Auction Data Workstation

The IPO Workstation, which the exchange rolled out on Monday, Feb. 2, will be one mechanism by which traders can access Nasdaq's also-new IPO Indicator, a tool designed to help make their quoting more competitive during the pre-IPO auction period before a stock begins trading on Nasdaq for the first time. Users can also access the IPO Indicator via the existing Nasdaq Workstation for no additional fee, while the exchange is offering access to the IPO Workstation for free until the end of June. Beyond that, officials decline to comment on what Nasdaq will charge for the IPO Workstation. The IPO Indicator can be launched from either workstation, both of which operate via secure websites and run on the same underlying platform

Nasdaq has incorporated data from its Net Order Imbalance Indicator into the tool, which it uses-along with pricing from an IPO's underwriter-to calculate a reference price every five seconds during the 15-minute pre-IPO period before a new IPO is allowed to start trading at 10am. During that period, traders can place trades on the order book before trading begins, and the IPO Indicator allows them to see where their price ranks compared to other orders from their firm-though not the entire activity including other firms' activity, for confidentiality reasons-which provides "invaluable" information into where a trader stands on the order book.

"Based on the current reference price, you'll be able to see where you stand in the queue and know how likely you are to get a complete fill," says Jay Heller, senior managing director and IPO execution officer at Nasdaq. The indicator measures in share count and percentage how much of an order would be filled if it executed at the indicative price.

In addition to the IPO Indicator, Nasdaq plans to incorporate more content into the IPO Workstation in future over time, though Heller declines to speculate on what datasets future iterations might include. "The IPO Indicator tool is the first part of providing additional insight. There are other ideas and thoughts about additional tools further down the line... and we will be developing these with our member firms based on feedback... [and] what is important to them," Heller says.

Feedback in the product's first week has been "extremely positive," he says, adding that several firms have signed up for multiple accesses to the IPO Workstation.

Max Bowie