Does Any broker Allows IPO stocks for MIS/Shorting?

On Zerodha i can’t do MIS or Short sell for IPO stocks listed recently. Is this brokers restrictions or at Exchange level? Any broker allows MIS for IPO stocks?

I think this is exchange level

1 Like

Its the restriction by broker, i think alice blue & angel broking allows you for MIS Order or Short Sell on first day of listing itself.

if its broker related i don’t know why Zerodha has placed the restrictions. @siva @ShubhS9 can you please let us know the background of restrictions?

Because on listing day the shares are Highly Volatile. Higher the volatility Higher the risk of Loosing Money By Clients. Just take an example of Nazara Tech, stock listed at 81% premium and then in noon stock hits lower circuit for trading day, that’s 40% downside on intraday, huge risks for clients.

isn’t its individual choice how much risk it want’s to take, brokers should not be restricting any script just because of volatility !!

This is not only about individuals, brokers too have risk if they will give you intraday positions suppose 5 times and you are purchasing shares worth rs 100000 so intially your margin utilised will be 20000 rs, but if stock comes down to say 25% intraday, i.e., 25000 loss intraday so brokers have to pay 5000 extra to exchange and if clients denied to pay that loss amount then it may incur huge loss to brokers that’s what we see in market like india nivesh, karvy etc. they give clients additional leverages and if clients incurrs huge losses then they defaults to pay them and ultimate liability will be on brokers side and in the end they vanishes. Though there may be some legal remedy for brokers to claim losses from clients but better to avoid these unnecessary scenerios. Am i right @nithin

2 Likes

Increase the margin max exchange stipulates(even if Risk management system suggests to reducing it to less than 5X) but never restrict any trade!! if things are allowed than i don’t think its brokers right to restrict any trade!!

Yep, stocks listing are usually very volatile and can get stuck at the circuit price. There is no way to risk manage once there are only bids or asks for stock and client is stuck in a position that is going against him/her.

2 Likes

But . IPO stocks on the listing day has no circuit .
Am I right ?

There will be circuit limit but it will be on open price which is determined in pre open session.

In FYERS SECURITIES MIS allowed, on the listing day also