How to Purchase IPO on Interactive Brokers

What is IPO - Initial Public Offering


IPO is the very first sale of stock issued by a company to the public. An IPO is underwritten by 1 or more investment banks. Through this process, a privately held company is transformed into a public company.


In this article, I am going to write about purchasing US IPO as a foreigner (Singaporean) from Interactive Brokers Classic Account.


Steps:

1. Log into Account Management --> Trading --> IPO Subscription


You will be tasked to complete a declaration form.


Once done, you will be taken into the IPO Subscriptions page where the currently active IPO subscriptions will be shown.






2. Request Shares


3. Place your order


On the evening the IPO "prices," your broker will notify you that the offering is going forward. You will be given a deadline to place your order. Only after you place the order will you find out for certain if you were able to buy any shares.


Please be noted that according to Interactive Brokers website:

IB generally does not operate as an underwriter or selling agent of IPO shares, the first opportunity customers have to transact in such shares does not take place until the issue begins trading in the secondary market.

Source: https://ibkr.info/node/1897

https://www.interactivebrokers.com.hk/en/software/am/am/trade/ipo_subscription.htm


Conclusion

If you are really keen to get your hands on IPO, you can consider signing up with the other US Brokerages such as TD Ameritrade, Fidelity or Charles Schwab as they aren't available from Interactive Brokers. However, you can read here why I chose to open an account with IB.

TD Ameritrade will permit you to invest in an IPO if you have at least $250,000 in assets with the firm or have traded stock with TD Ameritrade at least 30 times in the last 12 months.

Fidelity's requirements are similar to TD Ameritrade's. Customers having $100,000 with the broker are eligible to participate in IPOs led by underwriter Kohlberg Kravis Roberts & Co. (KKR). Eligibility for other IPOs might be restricted to customers having as much as $500,000 with Fidelity -- or placing 36 trades in the past year would qualify a customer to participate. Charles Schwab's requirements are even easier to meet: $100,000 in your account, or 36 trades in your history.


Source: https://www.nasdaq.com/article/how-to-invest-in-ipos-cm875904