Grey Market

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DEFINITION of 'Grey Market'

1. A market where a product is bought and sold outside of the manufacturer's authorized trading channels.

2. The unofficial trading of a company's shares, usually before they are issued in an initial public offering (IPO).

INVESTOPEDIA EXPLAINS 'Grey Market'

1. For example, if a store owner is an unauthorized dealer of a certain high-end electronics brand, the product is considered to be sold in the grey market. If the product is illegal, it would be selling on the "black market".

2. The grey market is an over-the-counter market where dealers may execute orders for preferred customers as well as provide support for a new issue before it is actually issued. This activity allows underwriters and the issuer to determine demand and price the securities accordingly before the IPO.

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RELATED FAQS
  1. How do I identify a gray market?

    The term "gray market" refers to the market for the purchase and sale of uncirculated securities that will be offered at ... Read Full Answer >>
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