Companies that want to raise a substantial amount of cash often accomplish this by selling shares of stock in the company. If the company has never raised cash by issuing equity before, the offering is known as an Initial Public Offering or IPO.
Participating in a new IPO through TD Ameritrade allows you to purchase stock at the IPO price. The IPO price is determined by the investment banks hired by the company going public. If you meet eligibility requirements and TD Ameritrade is participating in the IPO you are interested in, you can place a conditional offer to buy. Be sure to read the preliminary prospectus prior to submitting a conditional offer to buy in a new IPO. Placing a conditional offer to buy does not mean that you will receive shares of the IPO.
It is important to note, that your ability to obtain shares of any new issue security may be significantly limited because overall demand for the IPO may far exceed the actual supply of shares coming to market.
TD Ameritrade generally begins accepting COBs one week prior to expected pricing date. Depending on where the IPO prices, it may be necessary to reaffirm your conditional offer to buy. Allocations are based on a scoring methodology. If you receive an allocation, the shares will post to your account the morning the IPO is expected to trade on the exchange.