About Gray Market
About
Gray Market
IPO Grey Market is an unofficial
market where IPO applications or shares are traded (buy or sell as in
normal market) before they become officially available for trading on the stock
exchange.
It’s an over-the-counter market
where traders may execute orders for preferred customers as well as provide
support for a new issue before it is actually issued.
Note: As IPO Grey Market
is unofficial over-the-counter market, there are no regulations around it. All
transactions are done in cash on personal basis. SEBI, Stock Exchange or
Brokers are not involved or back this transaction.
Generally there are three rates in Grey
market:
a)
KOSTAK
IPO Applications: ‘Kostak' is especially
for people who do not want to take risk with IPO allotment or listing gains.
Examples: A investor sold
application at the price of 500/- Rs. Application, if issue oversubscribed and
there are no allotment, even Investor get 500 /- Rs. Investor profit is limited
to 500/- (Booking Amount) , and excess profit has to be settled with the buyer
of application
b)
Subject
to application allotment: Investor sold
application subject to term to that allotment ,if no allotment no money
Examples: A investor sold
application at the price of 6000/- Rs. Application, if issue oversubscribed and
there are no allotment, Investor get Nothing and if investor get
allotment , Investor get 6000/-, Investor profit is based on allotment and limited to 6000/- (
Booking Amount) , and excess profit has to be settled with the buyer of
application .
c)
FIRM
Buy or Sell: It’s Just usual trading
just like in stock market of shares(selling or buying) and all trades are
settled on listing of shares.
**Grey market trading is usually done among the small set of people who trust each other
For Eg.
CDSL
Issue Price: Rs 149 Per Equity Share (at upper band)
Lot Size: 100
a)
Kostak (Min application): Rs 750
b)
Subject to application allotment : Rs. 9000 on allotment
c)
Grey Market Premium: Rs 100-110 ( you may buy or
sell )
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