Understanding New Issues
Qtrade's new issues service provides an opportunity for you to participate in a range of initial public offerings (IPOs) and direct listings, as well as secondary and treasury offerings. Investment offerings could include, among others, common shares, preferred shares, income trusts and fixed income products.
What is a new issue?
A new issue is a security that is being offered to the public for purchase for the first time. It could be an equity or fixed income security. Companies usually use new issues to raise capital for expansion, to reduce debt or to finance other corporate activities.
A new issue can take the form of an IPO, where the company is issuing a security to the public for the first time. That same company may offer the same issue a second time, which is then referred to as a secondary issue.
How do I take part in a new issue?
When a new issue comes to market, underwriters like Desjardins and Fidelity facilitate the process by marketing it to brokerage firms like Qtrade Direct Investing. When they send us the offerings, we send them to our clients (assuming the issue meets Qtrade’s criteria). If you’ve signed up for new issue notifications, you’ll receive an email providing details about the new issue, and if you’re interested, simply log in to Qtrade to learn more and review its term sheet.
How do I register my interest in a new issue?
After signing into your account to learn more about the new issue, you can express your interest by heading to Trade > New Issues > Current Offerings and clicking on Express an interest. Qtrade then communicates your interest to the issue's underwriters, and we await confirmation on any allocations we receive. Once you’ve been confirmed on an allocation, your status will be updated in the new issues section of your account. When, or if, we receive any of the Issue (if it's a very popular issue, we may not receive anything), we start contracting three days prior to the settlement date, which gives you enough time to deposit funds, if needed.
What’s an Expression of Interest?
An Expression of Interest is a firm commitment from an investor to purchase a specific quantity of shares of a new issue prior to the closing. You should be aware that Expressions of Interest are firm. This means once they're expressed, you can't back out. Expressions are not guaranteed, and popular new issues are hard to come by, but we always do our best to fulfill Qtraders’ interests.
Can I get access to major IPOs through Qtrade?
Most new issues are secondary offerings that come to market by way of treasury offering or bought deals; they are commonly issued by companies to raise capital for certain operations, projects, etc. An IPO like MDA Ltd. or Airbnb (examples of IPOs from recent years), on the other hand, is usually underwritten by a major bank with the ability to bring a company to market.
Unfortunately, this process often skips retail investors altogether, as large institutional clients who have sway with the larger underwriters snap up large allocations, leaving little left for everyone else. For retail investors, this usually means having to wait for the security to trade on the secondary marketplace — just like any other listed security.
How can I get access to newly issued bonds?
Unlike debentures, bond issuances are few and far between. The common practice for Qtrade clients is to purchase bonds through the Fixed Income centre instead, which can be found under Trade.
What should I know about new issues through Qtrade?
Please note that we don’t tend to post U.S. IPOs in our Current Offerings. It is very rare that we get access to them. However, if you are interested in a new issue that isn’t listed on Qtrade’s Current Offerings, please contact us and we’ll let you know if it’s possible to submit an expression of interest.
To receive new issues notifications, select New Issues under the Trade tab from your Qtrade account. Then click the New Issue Notification Emails link, input your email and hit Submit.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.