My Portfolio

Wednesday, May 18, 2016

My First IPO and Bond Subscription

Knowing the mechanics to perform a task is important to save you time. After all, time should be spent on analysis, and not mundane chores like this!

Steps to apply are written in this forum.

I will summarize the salient points below.

1. Have a CDP account.
Best to open with a broker. Ask for a CDP account to be set up for you. I opened mine with Maybank KE. Don't worry, its free. Ask before signing, just to make sure.

2. Apply via ATM or DBS Ibanking platform (Preferred)
You will incur $2 fees for IPO, Bonds and Singapore Savings Bonds subscription.
Have your CDP account number ready (for first timers).
DBS is usually the agent due to its huge customer reach.
    • ATM
      • Go to 'Other Services' and select Electronic Shares Application or lookout for 'Bonds' if you are subscribing for corporate bonds.
    • DBS Ibanking
      • Under 'Invest', there is a drop-down with 'Electronic Shares Application'. Both bonds and shares IPO are done here, if available
      • Fill up the questionnaires and a list of available IPO and Bond subscriptions should appear
      • Read the Prospectus and make an informed decision
Note: The purchase close at 12pm on the closing date (usually). Money will be debited immediately upon subscription. If you fail to be alloted any shares/bonds, the money will be refunded.
3. Check results using DBS Ibanking
  • Under 'Invest', drop-down to 'Other Services' and find 'View Electronic Shares Application (ESA) Results'
  • Usually released 1 business day after the closing date, at 7pm or 8pm
    Here's an example of the results. 

    4. Where are my IPO shares/ bonds and how to sell them?

    You can view your holdings via CDP website.
    This is recommended before you attempt to sell your holdings, because you want to make sure you have the asset, if not it may constitute as a 'short-sell' when you place your sell-order.

    To sell your holdings, you can use any broker's "normal cash accounts" as long as it's linked to your CDP account. 

    Do not worry if you cannot see the shares/ bonds that you have been allotted from the IPO. It will NOT be visible from the brokers' trading platform.

    Therefore, it is important to check CDP website for your exact holdings, before selling.

    You can see that while subscribing is fairly convenient through Ibanking, the sale of assets are much more 'ambiguous'. Personally, I am not comfortable that i cannot see the holdings in my brokerage account. It also makes tracking my portfolio a bit more difficult. Who knows, i may forget about these assets after a while. Out of sight, out of mind.

    Also, given that the $2 is non-refundable, excessive subscription to IPOs may burn a hole in your wallet. The probability of not getting allotted is rather high.

    Sure, if you manage to be lucky and get the IPO, you pay only $2 for a transaction that can be worth $1000 to infinity. But if you are considering to sell it, you will be subjected to the brokerage fees, the same old drill: $25 min sum.

    As a standard chartered online trading user, and a small investor, i believe that using standard chartered platform to trade will prove to be more cost-effective. At only 0.18% and no min fees, it is definitely cheaper.

    Of course, that is only looking at the perspective of fees. IPOs have other considerations.

    For those interested in looking at the ballot results, here's one. I have failed to get any Manulife US Reits shares.
    You can find this information from the company's website, or SGX under corporate announcements.