When it comes to subscribing to an Initial Public Offering (IPO), the typical way that many investors submit an application is through an ATM. This is, after all, the way our parents have been subscribing to IPOs for many years.
What is less frequently mentioned about is that investors can also subscribe to IPOs through internet banking as well. This is a much more convenient method as you can do it at the comfort of your home, without creating a long queue behind you at the ATM.
In this article, we will be running through the steps that you need to know if you wish to subscribe to an IPO through internet banking (ibanking).
Start By Opening A CDP Account First
Before you get started on your investing journey in Singapore, do note that in order to apply for IPO shares, you first need to open a CDP account. Operated by the SGX, your CDP account provides integrated clearing, settlement and depository facilities for people in the Singapore securities market, for both equities (i.e. stocks) and fixed income instruments (i.e. bonds).
You can think of your CDP account as a safe deposit where stocks and bonds that you buy on SGX are automatically deposited and stored in your personal CDP account, rather than held with the broker you used to complete the transaction.
You can sign up for a CDP Account by downloading and completing the CDP application form. More information can be found on the SGX website. Alternatively, you can open your CDP account through the brokerage firm that you are already opening an account with.
CDP will notify you by post with all your necessary login information in about 10 business days from the day of your application submission. Do note that each investor can only hold one direct account with CDP.
Here’s an advice. Since the application period for many IPOs will usually just be a short period of time, it makes sense for you to open a CDP account first. This way, when you finally apply for an IPO that you are interested in, you will already have your CDP account ready, rather than having to wait for your CDP application to be completed while the IPO offering is underway.
Step 1: Login To Your ibanking Account
Our step-by-step example below is based on an application made done through DBS i-Banking. However, you may also apply for IPOs through the ibanking platform of both OCBC and UOB as well.
After logging in to your ibanking account, you should see an “Invest” tab. Scroll over the tab and you will see “More Investment Services”. Select it.
Step 2: Select Electronic Shares Application
Select “Electronic Shares Application (ESA)”.
Step 3: Complete The Declaration
Complete the simple declaration form and state your country of residence.
Step 4: Select The Shares That You Wish To Apply For
You will see the shares that are available for you to apply for here.
As mentioned in the footnote highlighted below, not all IPO shares are automatically included for internet application. If you do not see the shares that you wish to apply for listed here, this means you will need to apply for it at the relevant ATMs.
Step 5: Applying For The Shares
You should then decide the number of shares that you wish to apply to. Do note a few “rules”.
> In order to apply for a certain quantity of shares, you need to at least have the same amount of savings in your account, equivalent to the value of shares that you are applying for. For example, if you are applying for $10,000 worth of shares, you need to at least have $10,000 in your savings account.
> The money in your designated savings account will be deducted from based on the value of the shares that you have applied for.
> If you are unsuccessful, or partially successful, the remaining amount will be returned to your savings account. If you are successful (i.e. you got all the shares that you have applied for), no money will be returned.
> There is a service charge of $2 per application. This applies regardless of how many shares you apply for, or whether or not you are successful.
> Do note that for each IPO, you can only make one submission per CDP account. In other words, you cannot apply using your DBS ibanking account, and then use your OCBC/UOB ibanking account to make another application, thinking it will increase your chances. It does not work this way.
Step 6: Wait For The Allotment Results
IPO allotment results are usually announced the day after the application closes. Once it’s announced, you can login to your ibanking to check if you are successful.
If you are successful, you may 1) get all the shares that you have applied for or 2) get partial of the shares allocated to you.
Under the second scenario, unused cash will automatically be returned to your savings account.