In relation to an initial public offering (IPO), it is the first public trade/ transaction. It is a mechanism to initiate and open trading in securities that traded in the OTC market in order to help issuers of such securities attract significant interest upon listing on an exchange from market participants who previously could not invest in such securities.

An IPO cross is usually initiated on the morning that an IPO is set for trading. During that time window, market participants can submit buy and sell orders. And in real-time, the market palace (exchange) matches up such orders on its electronic system. Those orders can be entered into the system, but filling will not take place until the securities begin trading.

IPO cross may involve a declaration by an exchange regulator of a regulatory halt in a security that traded in the OTC market prior to its initial pricing on the respective exchange, for the purpose of allowing the initial pricing of such a security through the IPO cross mechanism, whereby a new tie-breaker can be established for determining the current reference Price and the cross price for such a security.

An IPO cross involves a very short quotation only period (e.g., 15 minutes) and a display of clearing price every 5 seconds or so. The quotation period can be extended by a regulator for extra time (e.g., 5 minutes), etc., in order to establish a tie-breaker.