What is indication of interest?

This is when an investor expresses their intention to buy securities that have not yet been issued but are still in the underwriting stage of being registered.

Where have you heard about indication of interest?

You might have heard about them in the context of initial public offerings (IPO), when a security is offered on a public stock exchange for the first time. Most indications of interest are produced before the IPO occurs.

What you need to know about indication of interest.

Indications of interest are not always required, but they're normally used before an IPO or before an institution places a block trade, which is an order for the sale or purchase of a large number of securities. An indication of interest is not binding, because it's illegal for securities to be sold while they're still in the registration process. Once the indication of interest has been produced, the investor's broker must then provide the investor with a prospectus with more information about the security.