Glossary · PSX Mechanics
Initial Public Offering
The first time a company offers its shares to the public on a stock exchange. On the PSX, IPOs are conducted through the e-IPO system. Successful IPOs often attract significant interest from both retail and institutional investors.
01—What is Initial Public Offering?
The definition — and what it means in practice.
An Initial Public Offering (IPO) is the first time a company offers its shares to the public and becomes listed on a stock exchange. Before an IPO, shares are typically held by founders, early investors, and private holders. In an IPO, a fixed number of shares are offered at an offer price, and investors apply to receive an allotment. After listing, those shares can be traded in the secondary market.
IPOs matter because they are often the first chance for retail investors to access a company’s shares through a regulated exchange. Demand can exceed the available shares, so you may receive fewer shares than you applied for, or none. Once trading begins, the market price can move quickly as buyers and sellers discover a fair value. Understanding the IPO process helps you plan cash, expectations, and risk.
If a company offers 1,000,000 shares to the public at Rs 10 each, that first sale is the IPO; after listing, the same shares trade on the exchange.
- An IPO is a company’s first sale of shares to the public and its entry into the stock market.
- You apply in the IPO; you may not get full allotment if the offer is oversubscribed.
- After listing, prices are set by market trading, not by the IPO offer price.
- IPOs can be volatile because the market is still discovering the company’s value.
- An IPO is a primary-market event; later buying and selling happens in the secondary market.
02—How initial public offering works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), IPOs are conducted through the e-IPO system. Investors submit applications for shares during the IPO window and, if successful, receive an allotment. Once the company is listed, trading shifts to the normal PSX market sessions, where prices change based on supply and demand.
A PSX investor typically encounters an IPO as a separate process from regular stock buying. You need the basic account setup used for PSX investing, including a Unique Investor Number (UIN), and holdings are maintained electronically through the Central Depository Company (CDC). After shares are allotted and trading starts, buying or selling follows the standard market process with settlement on T+1 (one business day).
When IPO shares start trading, price movements can be sharp, especially if interest is high. In normal PSX equity trading, daily price limits (circuit breakers) apply for most equities at ±10% or Re 1 around the last day close price (LDCP), whichever is higher. These limits can affect how quickly the newly listed share price adjusts in the first few sessions.
03—Common misconceptions
Where investors most often get this wrong.
If I apply in an IPO, I will definitely get shares.
Allotment depends on how many shares are offered versus how many applications are received. Oversubscription can mean partial allotment or no allotment.
The IPO offer price is the ‘correct’ value of the company.
The offer price is an issuance price set for the offering. After listing, the market price is discovered through trading and can move above or below the offer price.
Buying in an IPO is the same as placing a normal market order.
An IPO uses an application and allotment process in the primary market. Normal orders are placed after listing, in the secondary market order book.
04—Using initial public offering on BSL
Where this term shows up across the platform — with live data.
- Read beginner terms on our glossary.
- Browse listed shares once trading begins on the stocks.
- Filter and compare companies using the stock screener.
- Track overall market activity on the market.
05—Frequently asked questions
What investors ask about initial public offering on the PSX.
Frequently Asked Questions
On the PSX, an IPO is the first public offering of a company’s shares and its initial listing on the exchange. In Pakistan, IPO applications are conducted through the PSX e-IPO system, and after listing the shares trade like other listed equities.
An IPO is a primary-market issuance where you apply for new shares offered by the company and may receive an allotment. Open-market buying is secondary-market trading where you place orders against other investors in the order book after the stock is listed.
Oversubscription happens when investor demand is higher than the number of shares offered in the IPO. This can occur when a listing attracts interest from both retail and institutional investors, leading to scaled-back or zero allotments for some applicants.
If your IPO application is successful, shares are allotted through the IPO process and then held electronically in the Central Depository Company (CDC) system. After listing, you can trade them in the PSX market like other listed shares.
Once the IPO shares are listed and you trade them in the market, PSX equity trades settle on T+1, meaning settlement occurs one business day after the trade date.
06—Related terms
Keep building the picture.
The market where new securities are issued for the first time, either through an IPO or subsequent share offering. Money raised goes directly to the issuing company.
A company whose shares are officially traded on the Pakistan Stock Exchange, following SECP and PSX approval and compliance requirements.
The marketplace where shares of publicly listed companies are bought and sold. In Pakistan, this refers to the Pakistan Stock Exchange and the ecosystem of brokers, regulators, and clearing institutions that support it.
An investment firm or broker that purchases a new security issue from the issuing company and resells it to the public or institutional investors. Underwriters assume the risk that the securities may not be fully sold at the offering price.
A standardised number of shares set for trading transactions on the PSX. In most cases, a board lot is 100 shares, though this can vary depending on the security's price level.
The current standard settlement cycle on the PSX, where trades are finalised one business day after the transaction date. The shift from T+2 to T+1 was implemented to reduce counterparty risk and improve market efficiency.
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