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 >>
  2. Why are some spin-offs taxable and some are tax-free?

    The manner in which a parent company structures the spinoff and divests itself of a subsidiary or division determines whether ... Read Full Answer >>
  3. How does an underwriter syndicate work together on an initial public offering (IPO)?

    An underwriting syndicate is a group of investment banks that share the responsibility of marketing the shares of a company ... Read Full Answer >>
  4. What is the average range for the price-to-earnings ratio in the electronics sector?

    Investors purchase shares of company stock and other traded securities through capital markets in either primary or secondary ... Read Full Answer >>
  5. What is the difference between a primary and secondary financial market?

    Primary and second financial markets describe two different types of marketplaces where investors and traders buy and sell ... Read Full Answer >>
  6. How do spinoffs differ from initial public offerings (IPOs)?

    A spinoff is when a public parent company organizes a subsidiary and distributes shares to current stockholders for the new ... Read Full Answer >>
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