How many days must a firm's research analyst wait before issuing a research report on an initial public offering?

The appropriate waiting period for a firm's research analyst to issue a research report on an initial public offering (IPO) is 10 days. This regulation is in place to prevent potential conflicts of interest following the IPO. After an IPO, analysts must wait this designated period to ensure their research is based on a thorough analysis rather than influenced by immediate market reactions or conflicts from the underwriting process.

The rationale behind this timeline is rooted in the desire to promote fair trading practices and reduce the potential for manipulation. Prior to this waiting period, analysts may have been privy to non-public information or have relationships with the companies they cover, which could bias their research reports. By instituting a 10-day period, the market has a more stable foundation for assessing the company's value post-IPO, allowing more informed and objective analysis to take place.