How will placing a Conditional Offer to Buy impact my trading?

Q: How will placing a Conditional Offer to Buy impact my trading?

Placing a Conditional Offer to Buy (COB) an US IPO will not impact your trading. The account must have enough Excess Liquidity to cover the COB amount when the COB is submitted. However, this Excess Liquidity requirement will not restrict your ability to trade other securities or withdraw funds from your account. If the account does not have enough Excess Liquidity to cover the COB amount, the COB will be rejected. The COB amount is determined by multiplying the COB quantity entered by the user by 120% of the high price of the IPO's price range. The IPO price range is stated in the prospectus. Interactive Brokers will reduce the COB quantity to a level that the account can accept (with a general minimum of 100 shares) if the account’s Excess Liquidity falls below the amount required to support the existing COB amount while the IPO is open for COB submission and modification. Example Assume that the prospectus shows the IPO’s price range as $8.00 to $10.00 and an account has $13,000 in Excess Liquidity. The COB price range high would be $10.00 * 1.20 = $12.00. The user enters a COB quantity of 2,000 shares. This offer would be rejected because it would require $24,000 in Excess Liquidity, which exceeds the $13,000 in this example. The user then enters a COB for 1,000 shares. The required Excess Liquidity is $12,000 (1,000 shares * $12 per share). The COB will be acknowledged. The account then executes a trade which results in Excess Liquidity decreasing to $2,400. The IPO COB quantity will be automatically reduced to 200 shares ($2,400 divided by $12 per share). The account executes another trade which results in Excess Liquidity decreasing to zero. The IPO COB quantity is automatically reduced to zero.

Question

Accepted Answer

Placing a Conditional Offer to Buy (COB) an US IPO will not impact your trading.

The account must have enough Excess Liquidity to cover the COB amount when the COB is submitted. However, this Excess Liquidity requirement will not restrict your ability to trade other securities or withdraw funds from your account.

If the account does not have enough Excess Liquidity to cover the COB amount, the COB will be rejected.

The COB amount is determined by multiplying the COB quantity entered by the user by 120% of the high price of the IPO's price range. The IPO price range is stated in the prospectus.

Interactive Brokers will reduce the COB quantity to a level that the account can accept (with a general minimum of 100 shares) if the account’s Excess Liquidity falls below the amount required to support the existing COB amount while the IPO is open for COB submission and modification.

Example

Assume that the prospectus shows the IPO’s price range as $8.00 to $10.00 and an account has $13,000 in Excess Liquidity.
The COB price range high would be $10.00 * 1.20 = $12.00.
The user enters a COB quantity of 2,000 shares. This offer would be rejected because it would require $24,000 in Excess Liquidity, which exceeds the $13,000 in this example.
The user then enters a COB for 1,000 shares. The required Excess Liquidity is $12,000 (1,000 shares * $12 per share). The COB will be acknowledged.
The account then executes a trade which results in Excess Liquidity decreasing to $2,400. The IPO COB quantity will be automatically reduced to 200 shares ($2,400 divided by $12 per share).
The account executes another trade which results in Excess Liquidity decreasing to zero. The IPO COB quantity is automatically reduced to zero.