[notyourday]

> There is none. On the first day of trading there would be an opening auction as is done with every other stock listed on the NYSE. Prior to open, everyone interested in trading submits his orders. Then as many shares as can be traded are traded at the price at which the maximum number of shares can be traded. That is, the price is determined by supply and demand.

This is just positively incorrect for stocks that did not IPO via auction or regular model.

In the regular model a company sells stock to the underwriters and the underwriters make initial placement of the stocks with their clients. Some of those clients would be interested in selling the stock immediately especially if the stock pops. Since underwriters limit the release of the stock to below interest on the market either via pricing or by artificially restricting even the shares that have been allocated to them there are buyers on the other side.

Presence of buyers and sellers at the same time creates a condition needed for the price discovery. In addition to that, the underwriters as the part of the contract guarantee that their affiliate entities would provide market making either directly ( mostly for OTC ) or via ECNs for NYSE listed stocks. These market makers would cover their short positions created by the buy orders using the shared delivered to the underwriters. All of these services are covered by the fees that underwriters charge.

One of reasons the current plan is being "studied by the SEC" is that if the company is planning a direct listing without the Dutch auction is that there are no market makers that are able to guarantee delivery of shares in the beginning of trading.