(Reuters) -Online brokerage Robinhood on Thursday said it is starting to roll out a platform that will allow users of its trading app to buy into initial public offerings alongside Wall Street funds, a step in its quest to “democratize” finance.
Access to IPOs will allow users to buy shares of companies at their offering price, with no account minimums required.
Currently, Robinhood users and other amateur traders cannot buy into stock of a newly listed company until its shares start trading.
The move could further erode Wall Street’s grip on stock market flotations. It would be easier to implement for Robinhood’s own upcoming IPO, given how companies and their investment bankers tightly control allocations to investors in new listings.
Since shares often trade higher when they debut, big funds that get allocations in the IPO have an advantage. The average first-day trading pop on U.S. listings of businesses in 2020 was 36%, according to data provider Dealogic.
Reuters reported about the new platform in March.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty)
