An initial public offering is a major milestone for any company. Many of the world’s most innovative and transformative companies have trusted Nasdaq as their exchange partner, and billions of dollars in capital are raised every year through IPOs on Nasdaq’s platform.
Nasdaq’s IPO process is distinguished by its transparent technology, which gives underwriters real-time access to view order flow through desktop tools. Nasdaq’s combination of transparency, real-time data, resiliency, and client support differentiates the exchange for major listings.
To learn more about how the IPO process comes together, Nasdaq Newsroom sat down with Scott Bacigalupo, Nasdaq’s Senior Vice President of Capital Formation.
Nasdaq Newsroom: What is your personal experience with the IPO process?
Scott Bacigalupo: I spent twenty-one years at Bank of America Merrill Lynch, and for at least ten of those years I opened every IPO that Bank of America was the lead underwriter for. All told, that is at least five hundred companies that I opened for them. And then, after that, I spent ten years at Allen and Company advising companies on capital markets and the IPO process. I joined Nasdaq in early 2026.
Nasdaq Newsroom: Based on that experience, how do you view Nasdaq’s IPO process?
Scott Bacigalupo: Over the past 15 years, Nasdaq has worked to refine and improve the IPO process. The company spoke to many banks and brokers, including myself, to get insights on what they need most on IPO day.
That feedback shaped BookViewer, Nasdaq’s IPO technology tool. It reflects Nasdaq’s dedication and commitment in working closely with the banking community and market participants to create fit for purpose technology solutions as well as a more seamless and efficient IPO process. Nasdaq has made a point to revolutionize their process and adapt to the environment.
Nasdaq Newsroom: Let’s talk through the basics of the IPO process. In an IPO, what are the roles of the underwriter and the stabilization agent?
Scott Bacigalupo: An underwriter is a bank which conducts the due diligence on a company (issuer) that intends to go public. The bank can then underwrite the transaction and help the company market it to investors participating in the IPO.
A stabilization agent tends to be one of the lead underwriters. Their role is to stabilize the transaction. A stabilization agent helps support the stock during early trading and is the primary point of contact for the exchange on listing day.
Nasdaq Newsroom: What is Nasdaq’s role on the day an IPO opens?
Scott Bacigalupo: The Exchange provides the technological infrastructure and platform that will facilitate the opening and trading of the stock. During the IPO process, exchanges are in close communication with the stabilization agent as well as broker-dealers participating in the IPO.
In other words, Nasdaq’s role on IPO day is to function as the connective tissue during the price discovery process, during which underwriters set opening stock price by balancing supply and demand, ensuring a fair market. During an IPO, Nasdaq provides tools and information to the stabilization agent, enabling the underwriter to see where supply and demand reside, which helps them establish the best possible opening price at a given moment.
Nasdaq Newsroom: How does an IPO get priced?
Scott Bacigalupo: Once a company decides it will go public, the underwriters will embark on taking the company on a road show, where management will meet with different investors and tell them all about their company, typically lasting five-to-nine days. During the roadshow, investors they are meeting with can indicate an interest in shares for IPO day.
Before IPO day, the underwriters will review all these indications of interest, and will make two big decisions. The first decision is what price they should recommend for shares sold in the IPO, which is based on their view of the demand from those indications. And the second decision is, once they suggest a price and it is approved by the company, they will begin to allocate shares to those investors who have indicated interest. Underwriters will price the stock the night before IPO based on that demand profile, and they will then allocate those shares.
Nasdaq Newsroom: How does the IPO pricing relate to the opening price for a company’s shares?
Scott Bacigalupo: After the IPO is priced and shares are allocated, investors who received shares on the deal, and potentially investors who did not receive any shares, will then go out, and participate in buying and selling.
The actual opening price is the expression of all those investors after the pricing and the allocation in the public markets. For an IPO at Nasdaq, that all goes through the stabilization agent, who sets the opening price of a stock to begin trading.
Nasdaq Newsroom: How was Nasdaq’s IPO technology developed and how does it support the IPO opening process?
Scott Bacigalupo: Nasdaq’s IPO technology has been iterative over time, developed through feedback from underwriters, investors, and other market maker players. Nasdaq created the IPO BookViewer, designed for both the stabilization agent and Nasdaq’s IPO Execution Team. BookViewer provides both Nasdaq and underwriters a real-time view of order data during the book building process and allows the simulation of hypothetical trades to assess price impact.
Two features in BookViewer are particularly helpful. The first enables the stabilization agent to see all bids, offers, and depth at each price point (within a $0.05 minimum), revealing where gaps in demand are so they can optimize the right opening price — a big differentiator between Nasdaq and other exchange platforms. The second allows the stabilization agent to test specific price points and see the likely outcome, such as how many shares would trade if a stock opened at $25, helping them more effectively estimate a potential opening price.
Nasdaq Newsroom: How does Nasdaq work with underwriters to open an IPO? Who actually opens a stock for trading?
Scott Bacigalupo: On IPO day, the stabilization agent determines when the stock is ready to begin trading, and they work hand in hand with Nasdaq, which designates an IPO Execution Officer to be the one who will formally execute and open the stock for trading at the direction of the stabilization agent. The IPO Execution Officer monitors the IPO process and communicates closely with the stabilization agent. More broadly Nasdaq also coordinates with lead underwriters on technology and infrastructure to support their role in opening the stock at the price they determine is optimal. The IPO Execution Officer is supported by broader teams that monitor market operations, technology, trading activity and market information in real time.
In fact, we have many open lines of communication: not only with the stabilization agent, but with the broker dealer community at large. The IPO Execution Officer is able to relay price and timing information to that broader set of stakeholders.
Nasdaq Newsroom: What influences when a stock opens for its first trade?
Scott Bacigalupo: There are many factors that will go into the ideal time to open a stock. One of the primary considerations is the amount of volume that is going to be opening – typically 8% to 10% of the total shares that are offered in the deal is what opens on an opening cross, the first tradable price based on real supply and demand.
In addition, the lead underwriter and additional book dealers take on institutional orders for buying and selling, and submit orders based on demand, which can be seen in the BookViewer. The price discovery process aims to strike the right balance of calibrating bids and offers to get to an ideal price and determination of enough volume to open a stock. That process has several factors that can influence how long it takes. The goal is to include as many interested parties (volume) in the opening trade as possible and minimize volatility.
Nasdaq Newsroom: On IPO day, will a stock begin trading at market open (9:30 a.m. ET)? How late can an IPO open?
Scott Bacigalupo: There is no specific cutoff or threshold for a company to begin trading on IPO day and a number of factors go into reaching the critical moment when an underwriter will deem a stock ready to open. Every company that goes public has its own complexities. The larger the IPO, the more complexity there is, the longer it will typically take to open – and each listing vehicle has its own nuances, including direct listings, SPACs, traditional IPOs, and more.
On IPO day, issuer and underwriter will select a specific quotation window in the morning to kick off the bookbuilding process, allowing market participants to focus attention on the IPO away from the 9:30 open, which is a busy time for the markets. The price discovery process takes time until we get to that carefully calibrated opening time where the amount of volume supports that price.
Nasdaq Newsroom: What happens if a stock experiences volatility after it opens?
Scott Bacigalupo: It is not unusual for shares to experience volatility during their first day of trading. This can happen because it is a new company, a new stock, and there is finally access to every investor who has been waiting to participate, so there is a confluence of all the different forces happening at once.
In the case of significant volatility, then Limit Up-Limit Down (LULD) would apply. LULD is a volatility management mechanism intended to bring liquidity together to balance supply and demand in moments of volatility in a single stock. New IPOs trade within a 10% price band up and down from the official opening price, with bands recalculated every 30 seconds by the SIP based on the arithmetic mean of all market trades, and if the bid or offer remains locked at either band for 15 consecutive seconds, a 5‑minute trading halt is triggered, concluding with an auction after which trading resumes.
LULD halts are not specific to IPOs; they occur on occasion throughout the trading day in many securities.
Nasdaq Newsroom: Is Nasdaq’s IPO technology regularly tested to ensure the ability to open IPOs and particularly large deals?
Scott Bacigalupo: Nasdaq regularly tests its technology infrastructure, including IPO functionality, to ensure smooth market operations across a range of scenarios. We certainly are cognizant of large transactions, and that is why we test regularly: to ensure that we have the scale and the capacity to manage any type and any size of transaction.
Nasdaq Newsroom: How many IPOs has Nasdaq hosted so far this year?
Scott Bacigalupo: As of June 11, there have been 38 IPOs this year, raising $23 billion. Nasdaq has led U.S. Operating Company IPOs since 2019, and to date, 500+ companies have switched from NYSE to Nasdaq across 12 sectors, 18 countries, 40 members of the S&P 500, and $4+ trillion in combined market value (since 2005). Sectors with strong public market appetite include AI, aerospace & defense, energy & minerals, and certain biotechs.
