The ASX has utterly failed to open up the IPO market to retail investors, despite thousands pleading with the company to introduce rules to allow wider access to IPOs.

And by doing so, has played into the hands of the investment banks, brokers and large institutional and professional investors. These players will still get the pick of the IPOs, while retail investors have been left behind.

Here’re a few examples where retail investors were locked out:

  • PWR Holdings Ltd (ASX: PWH) listed at $1.50 – current share price $2.80
  • BWX Limited (ASX: BWX) listed at $1.50 – current share price $4.57
  • Aconex Ltd (ASX: ACX) listed at $1.90 – current share price $5.33
  • Catapult Group International Ltd (ASX: CAT) listed at 55 cents – current share price $3.17
  • WiseTech Global Ltd (ASX: WTC) listed at $3.35 – current share price $5.89
  • Reliance Worldwide Corporation Aus P Ltd (ASX: RWC) listed at $2.50 – current share price $2.88

The ASX had called for submissions to a range of proposals regarding changes to the rules surrounding initial public offerings (IPOs) or companies listing on the stock market. The idea to lower the number of minimum shareholders to 100 was thankfully dropped, perhaps as a token offering to retail investors.

Instead, IPOs will require a minimum of 300 shareholders contributing at least $2,000 each, no matter what size they are. Companies will need a minimum market cap of $15 million and a minimum free float of 20%. But neither of those rules guarantee that retail investors will see a share of every IPO.

OnMarket Bookbuilds and ourselves had suggested that the ASX needed to follow the path of both Singapore and Hong Kong which require minimum allocations of each IPO to be available to the general public.

However, the ASX passed the buck on that idea – even taking a direct shot at OnMarket Bookbuilds – suggesting that the only reason it was promoted was so OnMarket BookBuilds would make more money. OnMarket Bookbuilds is a service that was setup to allow more investors to participate in capital raisings whether they are for IPOs or secondary raisings (and not just retail investors). As the ASX says:

“Such a significant change to the capital raising regime and the way in which bookbuilds are currently managed in the Australian market would have broad implications for market infrastructure, intermediaries and other stakeholders.

“The market impacts of such a change have not been examined and are not well understood, and would likely tend to promote some business interests over other stakeholders.”

Of course, the ASX doesn’t want to upset the brokers and investment banks and prefers to keep the status quo. The market operator also conveniently ignores the fact that Hong Kong and Singapore have been doing this for years.

As we stated in our original article, the ASX is turning its back on retail investors and 500,000 self-managed super funds (SMSFs) with around $600 billion (and growing rapidly) in assets to invest.

It’s also disappointing that ASX wants to keep in place an unfair and opaque structure surrounding IPOs.

That means retail investors will continue to be locked out of most IPOs. Even the Australian Financial Review is calling for an overhaul.

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Motley Fool contributor Mike King has no position in any stocks mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia owns shares of WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.