Why Can't SpaceX's Upcoming Public Listing Shares Be Traded Immediately Like A-Share Market Stocks?

Where does the first price of a stock that has never been traded come from?

On June 12, 2026, SpaceX was listed on the NASDAQ under the ticker symbol SPCX at an issue price of $135, corresponding to a valuation of approximately $1.77 trillion. It was the largest IPO in history. At 9:30 a.m. Eastern Time that day, the entire U.S. stock market opened as usual, but this highly anticipated new stock showed no sign of movement. The indicative quote appeared around 10:15 a.m., and the first official transaction occurred a bit later, opening at around $150 and closing at $160.95, about 19% higher than the issue price. Many Chinese investors watching the screen may wonder: Why can't we buy the stock right after it's listed today? Why do we have to wait for the underwriter's approval to start trading? Further questions arise: Since the exchange is open, why not directly list the stock on the exchange and let buyers and sellers match themselves? Why does an investment bank have to delay the process for an hour? This confusion is natural, as it reflects the experience familiar to A - share investors. In the Shanghai and Shenzhen stock exchanges, new stocks can be traded right from the opening on the first day of listing: call auction from 9:15 a.m. to 9:25 a.m., and continuous auction after 9:30 a.m. Anyone who wants to buy or sell can place an order, and the orders are directly matched in the exchange through the broker's channel without anyone deciding when to start in the middle. In contrast, the NASDAQ's approach of "waiting for the underwriter to determine that the price is ready before allowing trading" seems both slow and somewhat arbitrary. However, if we dig deeper into this small time difference, we'll find that it's not just a technical detail but a divergence between two market structures. To understand it, we need to answer a more fundamental question: Where does the first price of a stock that has never been traded come from? < h2 > The "Discovered" Opening Price < / h2 > For any listed stock, it can open smoothly at 9:30 a.m. today because the closing price from yesterday serves as an anchor, and the market has a continuous consensus on its value. But new stocks don't have this anchor. The $135 issue price set by the underwriter the previous night based on the roadshow book only reflects the subscription willingness of institutional and retail investors participating in the placement. It doesn't equal the price at which the secondary market is willing to trade. In fact, as soon as the market opened that day, the supply and demand in the open market pushed the price to $150. How can we match the first transaction price that is relatively stable and won't collapse or skyrocket right at the opening without a historical price? The NASDAQ uses a mechanism called IPO Cross. Before the opening, there is a period of "display only, no trading." All parties can place, modify, or cancel orders. The exchange broadcasts the indicative price, the number of matched shares, and the imbalance between buying and selling in real - time, but no transactions occur. Meanwhile, the lead underwriter (in this case, Goldman Sachs) acts as a price stabilizer, monitoring the constantly changing order book. Only when it determines that the price has converged, the buying and selling are roughly balanced, and releasing the stock won't cause disorderly fluctuations will it give the green light. At that moment, the call auction matches the opening price at once, and continuous trading truly begins. So, SPCX didn't open until around 10:30 a.m. It's not a deliberate making things difficult or the underwriter being willful. It's just that this price discovery process really takes time to converge for the largest IPO in history with several times oversubscription. The more orders there are and the more imbalanced the buying and selling, the more time it takes to find the clearing price that allows the maximum trading volume to clear. In economic terms, this is essentially the underwriter and the exchange jointly conducting a slow trial price adjustment for the market, deliberately not letting the price reach its equilibrium in one step to avoid overshooting. It's worth mentioning that Hong Kong has a different way to solve the same problem. The Hong Kong stock market has an independent retail channel for public offerings, plus a clawback mechanism. The actual retail quota for popular new stocks can be quite high. As a result, a large number of small accounts that won the lottery accumulate before listing, and everyone wants to cash out or stop losses before the official opening. With such a large demand, brokers offer the dark pool service: On the night before listing, brokers like Phillip Securities and Bright Smart Securities conduct internal matching in their own systems, releasing some of the trading pressure on the first day in advance. The next day, the Hong Kong Stock Exchange still has its own pre - opening auction to generate the official opening price, and the dark pool is just an informal pre - trading layer before it. Here, the comparison emerges: The U.S. concentrates price discovery in the official opening mechanism led by the underwriter, while Hong Kong adds an additional layer of the broker - internalized pre - market outside the official auction. In either case, price discovery requires an intermediate link capable of doing this. This is precisely the most crucial but often overlooked premise in the question of Chinese investors, "Why not trade directly on the exchange?" < h2 > The Real Question: Is There an Empowered Intermediate Layer? < / h2 > "Trading directly on the exchange" sounds reasonable, but it actually presupposes a specific market structure. In the A - share market, new stocks can be traded right at the opening because the Chinese market has a highly flat and penetrative structure: The trading and settlement accounts of all investors (including retail investors) are centrally opened in the systems of the exchange, the clearing company, and the custodian institution. As an intermediate layer, brokers are basically just a channel. Unlike their international counterparts, they cannot hold clients' stocks, funds, and margins, nor can they conduct internal matching for clients. Therefore, retail investors' orders can bypass any intermediate links and directly enter the central auction system of the exchange. In other words, the reason why the A - share market "doesn't need to wait for the underwriter's approval" is not because the mechanism is more advanced, but because there is simply no empowered intermediate layer for price discovery. The exchange's call auction mechanism has to complete this task instantaneously and mechanically, allowing all orders to go straight in. Li Xiaojia, the former CEO of the Hong Kong Stock Exchange, summarized this structure as "flat" and "penetrative" in an article after the 2015 stock market crash. He pointed out that about 90% of the trading volume in the A - share market comes from retail investors, while the investor composition in mature markets is almost the opposite: Institutions account for 60 - 70% in Hong Kong, and institutional trading volume in the U.S. has long exceeded 70%. The international market is basically a three - way game among listed companies, intermediaries, and institutional investors, with few retail investors directly participating. The A - share market is a unit market where ordinary people participate most directly and widely. The question "Why not trade directly on the exchange" can thus be transformed into a structural judgment: Does this market have an intermediate layer capable and permitted to undertake price discovery and liquidity provision? If so, mechanisms like IPO Cross, dark pools, and market - maker internalization will emerge; if not, orders can only directly hit the exchange. The difference among the three markets ultimately lies in the thickness of this intermediate layer. The intermediate layer of Hong Kong brokers is thick enough to conduct internal matching, so the dark pool can function. The U.S. intermediate layer is even thicker, with specialized wholesale market - makers emerging. That's why there is an underwriter - led opening mechanism and the so - called payment for order flow (PFOF) where retail order flow is sold to market - makers. In the Chinese mainland, the intermediate layer has been effectively removed, so neither the dark pool nor payment for order flow can occur in the system. Why is the intermediate layer in the A - share market so thin? We need to go back to the origin of the system. < h2 > The Origin of the System < / h2 > Looking at the history of mature markets, their intermediate layers grew from the bottom up over hundreds of years. Investors started with the wealthy, which gave rise to brokers. Early brokers were like small exchanges, buying and selling products for their own clients. Then, brokers joined together to establish exchanges. After the 1970s, the middle class and long - term institutions such as pension funds and insurance companies in mature markets entered the market in large numbers and became the main clients of brokers. This hierarchical structure is a natural product of market evolution, and regulation intervened as a referee after it took shape. The Shanghai and Shenzhen stock exchanges have a history of only over 30 years. The China Securities Regulatory Commission, the exchanges, brokers, and retail investors were born almost simultaneously and grew up together. In the early expansion period known as the "wild growth," problems were inevitable: Brokers misappropriated clients' margins for stock trading, and market manipulators controlled stock prices. This prompted the regulatory authorities to make a firm decision to conduct comprehensive governance of brokers over several years starting in 2004, cleaning up and rectifying intermediary institutions. In Li Xiaojia's words, the result of the governance was that the intermediate layer of the market was effectively "removed," and the A - share market has since become the unitary, flat, and fully penetrative market it is today. Therefore, the simplicity of the A - share market structure is not a natural form but a result of a regulatory choice. The intermediate layer didn't fail to grow; it was cut off after growing in the wrong direction. When we say "the Chinese market is the simplest," from the perspective of the trading venue topology, it is indeed a subtraction (with the fewest layers, no dark pools, and no payment for order flow). But from the perspective of the rulebook, it is an addition (with the strictest regulations around retail investors). These two things are not unrelated but two sides of the same path - selection coin: Precisely because the intermediate layer was cut off and retail investors were directly exposed to the market, the regulators had to step in personally and use a large number of pre - event regulations to shield inexperienced retail investors from risks. < h2 > No Free Lunch < / h2 > These two structures each have their costs, and neither is purer or better than the other. The advantages of the penetrative flat structure are very real. Since money, securities, and assets are all centrally held in the central system, it is almost impossible for brokers to steal or misappropriate clients' assets, and retail investors are "safest" at the account level. For regulators, it is "most transparent" as they can clearly see what each account is trading. With more than 200 million accounts directly participating in the auction, it is also the market where ordinary people participate most directly in price formation. However, the disadvantages of this structure are also prominent: The market is dominated by a highly homogeneous group of retail investors, lacking institutions with different stances to balance. It is very easy to form a herd effect and one - sided chasing of rising and selling of falling stocks, greatly increasing the risk of crowded stampedes during market turmoil. More subtly, Li Xiaojia pointed out a paradox of transparency creating blind spots: Precisely because the market is highly transparent, regulators' attention is concentrated within the market. The crisis ignited by off - exchange programmatic margin trading in 2015 remained outside the regulatory vision for a long time. Account - level safety does not equal system - level stability. The advantages and disadvantages of the thick intermediate layer structure are the opposite. Professional underwriters and market - makers are responsible for price discovery and liquidity provision, so the opening is more stable. The diverse judgments of different institutions can act as a buffer during market turmoil, and the one - sided effect is not likely to be too strong. However, the cost is that the multi - layer structure is not transparent to regulators. Examples of the negative consequences of this lack of transparency include MF Global misappropriating clients' funds and the large accumulation of toxic assets in the intermediate layer before Lehman Brothers, which went unnoticed. The intermediate layer will extract rent and create conflicts of interest. Payment for order flow has been widely criticized for potentially harming best execution. The UK banned it as early as 2012, and the EU has decided to ban it completely starting from the end of June 2026, while the U.S. still tolerates it. By comparing the two, we can see that the so - called superiority or inferiority of the systems is more about different combinations of constraints: transparency versus professional buffering, direct democracy versus herd risk, account safety versus system stability. Behind each advantage lies a cost. < h2 > After Path Selection, Constraints Are Locked < / h2 > What Chinese readers really need to think about is not which structure is better, but that once a certain path is chosen, the institutional constraints are locked: It's often difficult to adopt the advantages of other markets structurally. The A - share market's choice of the penetrative flat structure means it's difficult to graft the U.S. mechanism. Without a broker intermediate layer capable of internal matching, the dark pool has no place to exist; without empowered market - makers, payment for order flow and the underwriter - led opening mechanism also lose their carriers. Even if we admire the opening price "discovered" professionally on the NASDAQ, we can't simply copy it because that mechanism presupposes an intermediate layer that we actively removed back then. Deeper - level constraints are self - reinforcing. Since retail investors dominate price formation, regulators have to continuously protect them. Thus, there is a whole set of pre - event scaffolding such as the new - stock lottery, price limits, and special trading rules on the first day. Precisely because they are well - protected in advance, retail investors have difficulty developing independent risk - judgment abilities and end up relying more on protection. This is the closed - loop born out of what Li Xiaojia calls the "parental sentiment": Protection leads to dependence, and dependence requires more protection. The reforms in the past decade have essentially been an attempt to break this closed - loop, rebuild the intermediate layer, and shift the pricing power towards institutions. In 2023, the full implementation of the registration - based IPO system transferred the review power of IPOs from administrative approval back to the market mechanism. The A - share market has begun to show institutional and long - term characteristics. The proportion of institutional shareholding has also increased. By the end of 2025, the shareholding of domestic and foreign institutions had approached 40% in terms of free - floating market capitalization, and the direct shareholding of retail investors was compressed to around 30%. However, it's not easy to break free from path dependence: The funds of funds mainly come from retail investors. The pressure of subscription and redemption and the performance ranking assessment will make fund managers' behavior similar to that of retail investors, resulting in the so - called "retailization." In fact, in the third quarter of 2025, the market capitalization held by individual investors in terms of free - floating market capitalization exceeded half again, and the retailization characteristics rebounded. Although retail investors only hold less than one - third of the market capitalization, they contribute 60 - 70% of the trading volume, and their turnover rate is several times that of institutions. The binding force of the decision to cut off the intermediate layer 30 years ago is still clearly visible. The constraints are two - way, and this is not a dilemma unique to China. The U.S. also cannot achieve Chinese - style account - level safety and penetrative transparency without removing the intermediate layer. China cannot develop a U.S. - style professional price - formation mechanism without rebuilding the intermediate layer. Each path is self - consistent, and each path also carries its own inescapable constraints. The question "Why not trade directly on the exchange" actually asks whether a market should trust a professional intermediate layer to discover prices for the market or flatten everything and let everyone enter the market directly. Both answers are valid, and both come with corresponding costs. A mature attitude is not to envy the more professional opening price of other markets while being reluctant to give up the safer accounts in our own market. Instead, we should see clearly what constraints our path has locked in and then look for room for improvement within those constraints. There is no free lunch in the world, especially when it comes to market structures. The 10:30 a.m. opening and the ability to buy right at the opening are based on two complete but also incomplete logics. Understanding this is much more important than arguing about which is better. This article is from the WeChat official account < a target="_blank" rel="noopener noreferrer" href="https://mp.weixin.qq.com/s/YTXenQKlc16dDGlQUN6APg"> "Economic Observer" < / a >. Author: Fu Weigang. Republished by 36Kr with permission.

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Why can't SpaceX's upcoming public listing shares be traded immediately like stocks on the A-share market?