During the initial public offering (IPO) season, Paytm's wealth management division Paytm Money has announced the launch of a feature which will allow users to apply for IPOs before the actual IPO opening in the markets which is expected to significantly increase the participation of retail users in the process.
The conventional application process for IPOs was designed around timings, and till date, users are able to apply for an IPO only during select market hours over a window of three days. A large proportion of the investing community does not trade actively, and is likely to be busy during market hours, missing out on some of these IPOs.
This is particularly true in case of millennials and young investors. The “Pre-IPO Open application” feature has been specifically designed to target such users.
A user can now place an IPO order which is recorded on Paytm Money’s system, and sent to the exchange for processing whenever the IPO opens.
The user is notified of her application status throughout the journey, to ensure a seamless experience.
Zomato is the first IPO on Paytm Money launched with this feature, and thousands of applicants on the platform have already placed their orders over the last two days.
There is also the issue of congestion in networks experienced by some market participants during popular IPOs, driven by high demand during a short time span. As this feature gains traction, it might be possible to spread out the Pre-Open IPO Applications evenly during the market hours, reducing load on exchanges and payment gateways, and ensuring a better experience for broad market participants.
"Interest in IPOs has surged over the last couple of months, and we have seen cases where users have missed out from applying because of issues like tight schedules during market hours, and demand-led processing delays in the markets. We wanted to make the lives of our users easier and ensure that they don’t miss out on good opportunities," said Varun Sridhar, CEO of Paytm Money.
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