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IPOs

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An initial public offering, or IPO, is when a private company becomes a public company by offering shares on a securities exchange such as the New York Stock Exchange or NASDAQ. Private companies go public for a variety of reasons: maximizing shareholder value; providing liquidity to investors and employees; raising capital to reinvest and grow business; and using stock as a currency for mergers and acquisitions.

On occasion, TD Ameritrade will act as a member of the selling group for IPOs. When we do, we can offer qualified accounts the opportunity to participate. When we aren't, we can still offer you the opportunity to pursue investing in a company entering the market once it goes public. Once you open and fund an account, you can purchase a recently listed stock on the secondary market, as long as you decide it fits with your strategy.

Investing in an IPO

Investing in an IPO

Learn why and how a company goes public and the potential benefits and risks associated with an IPO for you as an investor.

How to buy IPOs

Here's how you can get in on an IPO when TD Ameritrade is a member of a selling group:

  • Not yet a client? Call 800-454-9272 or open an account.
  • Already a client? Log in to your account and select IPOs from the Trade tab, or call 866-678-7233 for assistance.

Once the company goes public, and its stocks begin trading on the secondary market, you can buy and sell them just as you would any other stock that you decide is right for you.

What you should know about IPOs

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. After the IPO has been issued, shares will begin trading on the market shortly thereafter. Most investors will be able to access those shares more readily.

TD Ameritrade generally begins accepting COBs (Conditional Offers to Buy) 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.

FAQs

Get answers to the most frequently asked questions about participating in an IPO when TD Ameritrade acts as a member of the selling group.

What are the eligibility requirements to trade IPOs?

To purchase IPO shares, you must open an account with TD Ameritrade, then complete a personal and financial profile, and read and agree to the rules and regulations affecting new issue investing. Each account being registered must have a value of at least $250,000, or have completed 30 trades in the last 3 months. Accounts must also meet certain eligibility requirements with respect to investment objectives and financial status. Your eligibility information will be validated each time you want to purchase an IPO. You must complete and submit an IPO Eligibility Form in accordance with FINRA Rule 5130 before you can be deemed eligible to participate.



For more information, contact us at 866-678-7233.

What is the account funding process for IPOs?

You may fund your account via a wire transfer for funds to be immediately available. Electronic funding can be used to purchase IPO stocks 3 business days after the deposit settlement date. Typically at TD Ameritrade shares of recently IPO’d stocks trading in the secondary market are not marginable for some time after the IPO.

 

Do you have questions about the IPO?

 

Please read our Frequently Asked Questions regarding funding and IPOs.

What are the risks and requirements involved with trading IPOs?

Be sure to read the prospectus before investing in an IPO.

 

IPO Risk Disclosure Statement

 

Rules and Regulations for New Issue Investing

 

Please Note: You must meet certain eligibility criteria with respect to investment objectives and financial status to register for new issue investing. TD Ameritrade is not endorsing any particular investment by making it available. IPOs may not be suitable for all investors. You must determine whether a particular security is consistent with your investment objectives, risk tolerance and financial situation. IPOs are non-marginable for the first 30 days.

Learn more

Stay up to date on the latest IPO news with TD Ameritrade Network* and The Ticker Tape. Here are a few suggested articles about IPOs:

 

 

*TD Ameritrade Network is brought to you by TD Ameritrade Media Productions Company. TD Ameritrade Media Productions Company and TD Ameritrade, Inc. are separate but affiliated subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Media Productions Company is not a financial advisor, registered investment advisor, or broker-dealer.

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