Robinhood announced on Thursday it will give amateur investors access to initial public offering shares, a move in its quest to “democratize” retail investing.
“We’re starting to roll out IPO Access, a new product that will give you the opportunity to buy shares of companies at their IPO price, before trading on public exchanges. With IPO Access, you can now participate in upcoming IPOs with no account minimums,” Robinhood said in a blog post on Thursday.
The Silicon Valley online broker said it will roll out the investing platform in phases for users of its trading app.
The move, if widely adopted in stock market listings, would be another disruptive effort by Silicon Valley Tech companies to curtail the iron grip of Wall Street’s biggest institutions on market flotations.
IPO shares have historically been set aside for Wall Street’s institutional investors or high-net worth individuals. “Most IPO shares typically go to institutions or wealthier investors. With IPO Access, everyday investors at Robinhood will have the chance to get in at the IPO price,” Robinhood said in a blog post.
Robinhood said it will work with Wall Street investment banks to get allocations for retail investors, adding that the new platform will be available to all customers, without any account limit restrictions.
“We’re constantly working to provide a more informative and empowering investing experience” the company said in a previous blogpost.
It is unclear if Robinhood customers will be able to invest in the online brokerage app’s pending IPO. The company is expected to go public in the first half of 2021 and has filed confidentially with the SEC.
Earlier in March, online finance start-up Social Finance (SoFi) also said it would allow retail investors to buy into IPOs.
Unlike Robinhood, Sofi will be an underwriter for its offered IPOs. Robinhood will get an allocation of shares by partnering with investment banks, but will not be an underwriter.