According to people familiar with the matter, Robin Hood markets, the US zero Commission securities trading platform, is building a new platform to “popularize” initial public offerings, including the company’s own offering plan, that is, to allow users of its trading app to buy new shares as early as Wall Street funds.
This move may further weaken Wall Street’s control over the stock issuance market. The move will make it easier for Robin Hood to push ahead with his own IPO plans, given the firm and its investment banks’ tight control over the size of the rights issue to investors when they issue new shares.
At present, users of Robin Hood and other non professional traders can’t buy new shares directly. They have to wait until the shares start trading. Because the price of the first day trading of new shares is often higher than the bidding price, the large fund companies that get the rights issue in IPO take the lead. According to data provided by Dealogic, the average rise of new listed companies in the United States on the first day of trading in 2020 is 36%.
According to the source, Robin Hood plans to leave a large part of its total IPO volume to 13 million users and manage the new shares using the technology it is developing.
It is not clear what arrangements Robin Hood will make for this, or whether the company’s ambition will bear fruit, the source said. As the matter is confidential, the source asked to be anonymous. Robin Hood declined to comment.