IB IPO Auction System

T

Trader_Herry

Hey.

IB launched its own IPO Auction System. Now we can bid openly and let the market determine the maximum offering price.

1.
Let's say IB projected range is $23-27.
What if the maximum offering price (based on the bidding activities) turns out to be outside of the range, eg $21 or $29?
How much do we need to pay for the shares?

2,
Can I canel my purchases after the offering price is determined?


3.
How can I ensure I can get IB shares?
It appears I can bid at a unusually high price (eg $40) without any noticeable adverse effect. After all, when the price is settled, I must be higher than the maximum offering price. Let's say it is set at $27 finally. I just pay for $27 anyway even if I bid at $40.
Would this be a good strategy?
Or did I miss something?
 
Quote from Trader_Herry:

Hey.

IB launched its own IPO Auction System. Now we can bid openly and let the market determine the maximum offering price.

1.
Let's say IB projected range is $23-27.
What if the maximum offering price (based on the bidding activities) turns out to be outside of the range, eg $21 or $29?
How much do we need to pay for the shares?

2,
Can I canel my purchases after the offering price is determined?


3.
How can I ensure I can get IB shares?
It appears I can bid at a unusually high price (eg $40) without any noticeable adverse effect. After all, when the price is settled, I must be higher than the maximum offering price. Let's say it is set at $27 finally. I just pay for $27 anyway even if I bid at $40.
Would this be a good strategy?
Or did I miss something?
More...


where can you buy its IPO shares?
etrade only thing?
 
1. In a dutch auction, the bidding process determines the IPO price. During the auction, people bid whatever they think is a fair price for the stock for a specific quantity. Once all bids are in, the lowest price that can buy the last share is the IPO price. IB has 30 million shares it wants to tender. Bidders place their bids. Say there are a total of 100 million shares bidded for at various prices, ranked highest to lowest bid price. The price for the 30 millionth share is the IPO price.

2. You can cancel if one of the following happens.
- More than 15 business days have elapsed since the bidder submitted his or her bid in the offering.
- There is a material change in the prospectus that requires a recirculation of the prospectus by the underwriters.
- For an IBIPO auction with a $4 price range (e.g. $25–$29), if the public offering price in the offering is more than 20% above the high end of the price range or below the low end of the price range.
- For an IBIPO auction with a $2 price range (e.g. $25–$27), if the public offering price in the offering is more than 20% above the high end of the price range or more than 20% below the low end of the price range

3. Yep, bid $100 and you will likely get in on the offering. Nothing really bad about the strategy except you are obligated to pay that price if it is the set price. Are you really sure you want it at $100. You can make multiple bids at different prices. Say 100 shares at $22, 100 at $27, 100 at $35. If the final set price is $26, you got yourself 200 shares.

Quote from Trader_Herry:

Hey.

IB launched its own IPO Auction System. Now we can bid openly and let the market determine the maximum offering price.

1.
Let's say IB projected range is $23-27.
What if the maximum offering price (based on the bidding activities) turns out to be outside of the range, eg $21 or $29?
How much do we need to pay for the shares?

2,
Can I canel my purchases after the offering price is determined?


3.
How can I ensure I can get IB shares?
It appears I can bid at a unusually high price (eg $40) without any noticeable adverse effect. After all, when the price is settled, I must be higher than the maximum offering price. Let's say it is set at $27 finally. I just pay for $27 anyway even if I bid at $40.
Would this be a good strategy?
Or did I miss something?
More...
 
Thanks so much for your answers.
I have some questions.

Quote from lwlee:

1. In a dutch auction, the bidding process determines the IPO price. During the auction, people bid whatever they think is a fair price for the stock for a specific quantity. Once all bids are in, the lowest price that can buy the last share is the IPO price. IB has 30 million shares it wants to tender. Bidders place their bids. Say there are a total of 100 million shares bidded for at various prices, ranked highest to lowest bid price. The price for the 30 millionth share is the IPO price.
More...

Even if outside the range??
IB has set a projected range for its share, that is $23-27.
What if the bidding result turns out to be outside the range (eg $21, or $29)?
At what price should we pay?

What's the point of setting projected range then?
Just throw an estimated price which IB thinks so. This does more or less the same trick anyway.


2. You can cancel if one of the following happens.
- More than 15 business days have elapsed since the bidder submitted his or her bid in the offering.
- There is a material change in the prospectus that requires a recirculation of the prospectus by the underwriters.
- For an IBIPO auction with a $4 price range (e.g. $25–$29), if the public offering price in the offering is more than 20% above the high end of the price range or below the low end of the price range.
- For an IBIPO auction with a $2 price range (e.g. $25–$27), if the public offering price in the offering is more than 20% above the high end of the price range or more than 20% below the low end of the price range
More...

I don't quite get the $2 & $4 price range terms.
What does it mean by "For an IBIPO auction with a $4 price range"?
Does it mean the range all bidders place their bids?
Let's say there are 3 bidders only:
Bidder A - $23.30
Bidder B - $24.50
Bidder C - $25.80
So this is "IBIPO auction with a $2.50 price range"?

And what's the difference between both terms?
They all say if it is in such-and-such price range, then if offering price is outside 20% of the price range (either up or down).
Whether it's $4 or $2 price range has the condition, that is outside 20% of price range. I don't see why it has to mention it twice.



3. Yep, bid $100 and you will likely get in on the offering. Nothing really bad about the strategy except you are obligated to pay that price if it is the set price. Are you really sure you want it at $100. You can make multiple bids at different prices. Say 100 shares at $22, 100 at $27, 100 at $35. If the final set price is $26, you got yourself 200 shares.
More...

Realistically it is next to impossible that I have to pay $100.
And from the quotes you give me, it seems I can opt out even if I bid at $100, just in case if it does settle at $100.

What's the point of submitting multiple bids? I don't see the reason behind.
Just submit the desired number of shares you want and set it at a unusually high price ONCE only (eg $40). Then you can get the shares.

Thanks so much for your answers after all.
 
Works same way. Bids come in strong and low-high range is $35-75. Lowest possible IPO price will be $35. The projected range is only a projection.
Even if outside the range??
IB has set a projected range for its share, that is $23-27.
At what price should we pay?
More...
Give them an out. If it's much lower than $23, they can cancel the IPO. Give bidders an idea what they are looking for. Most serious bidders will try to bid around the range.

What's the point of setting projected range then?
More...

Not really sure why the 2 ranges have identical percentage limits. Only reason I can guess is that it was a mistake.

They're referring to the projected price range of $23-27. 20% above or below will require a bid reconfirmation.
I don't quite get the $2 & $4 price range terms.
What does it mean by "For an IBIPO auction with a $4 price range"?
Does it mean the range all bidders place their bids?
Let's say there are 3 bidders only:
Bidder A - $23.30
Bidder B - $24.50
Bidder C - $25.80
So this is "IBIPO auction with a $2.50 price range"?

And what's the difference between both terms?
They all say if it is in such-and-such price range, then if offering price is outside 20% of the price range (either up or down).
Whether it's $4 or $2 price range has the condition, that is outside 20% of price range. I don't see why it has to mention it twice.
More...

True, you can cancel at such a high price according to what they posted.

Submitting one bid leaves the possibility that you might not get in. For small players, what you suggest can work but for larger players looking to buy big blocks, having the ability to bid multiple prices give them flexibility.
Realistically it is next to impossible that I have to pay $100.
And from the quotes you give me, it seems I can opt out even if I bid at $100, just in case if it does settle at $100.

What's the point of submitting multiple bids? I don't see the reason behind.
Just submit the desired number of shares you want and set it at a unusually high price ONCE only (eg $40). Then you can get the shares.
More...
 
3. Yep, bid $100 and you will likely get in on the offering. Nothing really bad about the strategy except you are obligated to pay that price if it is the set price. Are you really sure you want it at $100. You can make multiple bids at different prices. Say 100 shares at $22, 100 at $27, 100 at $35. If the final set price is $26, you got yourself 200 shares. [/B][/QUOTE]



To calify, these 200 shares that this person would get would eb at the 26 dollar price right? Not at 27 and 35?
 
Yes, everyone gets at the final price.
Quote from galvanicsniper:
To calify, these 200 shares that this person would get would eb at the 26 dollar price right? Not at 27 and 35? [/B]
More...
 
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