Allocations of new issues should be based on which principle?

• A. Based on a first-come, first-served basis
• B. Based on the issuer's listing position
• C. Based on pre-established, transparent procedures that are fair and non-discriminatory
• D. Based on the underwriter's request

Answer: (C)

Allocations of new issues are guided by pre-established, transparent procedures that are fair and non-discriminatory. This approach ensures every investor has a fair chance to participate and the underwriting process isn’t swayed by who placed an order first, how fast it came in, or any preferential treatment for insiders. First-come, first-served can advantage those with faster access or bigger orders and invites gaming of the system; the issuer’s listing position doesn’t determine who gets allocations; and letting the underwriter decide based on its own request or preferences undermines fairness. By contrast, a published, objective set of rules—applied consistently—keeps allocations predictable and non-discriminatory for all participants.