HI i am having demat account and applied in some IPOs , but many companies not alloted any shares , what are the tips to get shares in an IPO compulsorily..thanks in advance.
2007-12-20 15:48:14 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing
IPO shares are allotted by many brokerages to their best customers first.
A very few allot them on a first come, first served basis.
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If you're with one of the more traditional firms -- best customer means has big account and generates lots of commission revenue. [trades a lot].
the "usual deal" with IPOs was that customers who were in the allotment virtually had to take it -- or they'd be dropped from the next one. skip once in a while, skate by but skip many and get dropped from the allotment list altogether. many firms had an unwritten rule that any customer who sold his IPO shares within six months was also dropped from the allotment list.
the purpose of the IPO [or a secondary offering] is to bring the shares into circulation and raise money for the company [and/or selling shareholders]. because this is at some cross-purposes with the company's duties to its customers, the customers got a break and paid no fees.
2007-12-20 16:04:33 · answer #1 · answered by Spock (rhp) 7 · 1⤊ 0⤋
The companies do not allot the shares -- the investment banks do. For high quality IPOs, they allot the shares to their good customers first. There is usually nothing left over for people like you. For the low quality IPOs, they are happy to let you buy shares.
2007-12-20 16:11:51 · answer #2 · answered by Ranto 7 · 1⤊ 0⤋