What is Provisional Trading?
Provisional Trading refers to the trading activity that takes place between the time a scrip is formally listed at the Stock Exchange and after it’s Initial Public Offering(IPO) has taken place and the subscriptions have been received from the prospective shareholders. During this time trading activity takes place under an informal mechanism before the settlement date of the subscription where all shareholders have to settle their positions with the Stock Exchange against their holdings in the scrip. Provisional Trading helps gauge for the investors the demand and supply situation of the scrip before formal trading starts at the Stock Exchange. The settlement procedure during the provisional trading period is similar to the settlement of Future Contracts.
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