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Why discount broker doesn't offer IPO?

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  1. Discount broker charges 60% to 90% less commission. Their other charges i.e. AMC are also significantly low. The way they provide this discount is by cutting down the operational cost using technology and by other means i.e. no branches, no sub brokers, and no expensive TV ads.
  2. By not offering IPO, MF, Insurance, FD's etc. investment options, they save licensing cost and operation cost.
  3. It requires for a broker to be the registered distributors of the IPOs. Broker get a small amount commission based on the applications submitted through them which have been considered eligible for the purpose of allotment. The commission is so low that the discount brokers do not see any financial benefits in becoming the distributor of IPO shares.


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