New ‘Rex’ software to even IPO playing field for retail investors

on Mar 30, 2015
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In a bid to ensure fairer access for private investors to the stock market, UK mid and small-cap stockbroking and advisory house Peel Hunt has developed bookbuilding software which wealth managers can use for free in collecting orders in an initial public offering (IPO), The Times reports today.

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The software, named ‘Rex’, has been developed in-house and allows wealth managers to place orders for shares the moment they come in.
Private investors do not currently enjoy the same level of access to IPOs as institutional investors, The Times commented, using Royal Mail (LON:RMG) as an example of a share sale in which institutional investors were given preference over retail investors, who ended up being allocated a small amount of stock.
Since IPOs picked up again in early 2013, as many as 264 companies have floated on the London Stock Exchange, raising more than £31 billion, The Times has calculated.
And since Royal Mail listed their shares in October 2013, Peel Hunt has seen in various surveys, that the participation of wealth managers acting for personal investors in IPOs has been way below the level it could or should be, The Times noted. This could be partially explained by regulation and restrictions on wealth managers, but it is more likely a result of banks taking the view that an IPO would be riskier and a company would have a less stable shareholder structure if retail investors were involved.
“Wealth managers who have seen Rex love it,” The Times said.
Peel Hunt’s managing partner Steven Fine is optimistic that the megabanks running most issues would also support Rex once the software proves it works in the next few weeks.

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