Getting the inside track

By THIS IS MONEY
Updated:

 

What is the 'grey' market that operates on new issues that operates before legit buyers are able to trade? Does it mean some people have an inside track and can force the price down? CW, Cheltenham.

Justin Urquhart-Stewart of Barclays Stockbrokers says: The grey market is the term used for the market in newly-issued shares that have yet to come to the official market. Grey market trading is generally carried out by large institutions for a brief period before all private investors have received their allocations and official trading starts. It exists because there is a demand for the shares traded on it so naturally the price of such shares goes up.

As for forcing the price down, it is unlikely that grey market trading will lead to the price falling below the issue price before official trading starts. New issues are usually priced to attract investors so if they are popular the price will leap on day one of official trading.

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