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Topline

Robinhood is working on a platform that will allow its users to buy into initial public offerings, Reuters exclusively reported Thursday, citing people familiar with the process, marking another push by the popular investment app to democratize investment opportunities that are traditionally only available to big banks and Wall Street firms.

Key Facts

Retail traders and lay people generally do not have access to IPO prices before the first day shares trade on a public exchange—that access is usually reserved for big institutions that are allocated shares before they are officially listed.

Since most companies see prices jump when shares are first listed, those retail traders could be missing out on gains because they didn’t have the opportunity to buy the shares at the lower price that big firms paid.

The project would also allow users to buy shares in Robinhood’s own upcoming IPO, Reuters reported, noting that access to its own listing will be easier for Robinhood to control because it will make the decisions about how to allocate its shares.

Negotiations for access to other companies’ IPOs would be more difficult because the process is so closely guarded by companies wanting to protect their profits and so carefully watched by regulators, Reuters reported, citing sources familiar with the process.

What We Dont Know

Robinhood filed the confidential paperwork for its offering earlier this week, but the timing and pricing is still unclear.

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