Explanation of Grey Market and GMP in simple terms:
- Grey Market is an unofficial market for the Pre IPO.
- GMP is the premium per share.
- Kostak is the premium per application.
- Sub2 or Sub2Sauda is the premium for the allotted application.
- As GMP is unofficial, thus there are no regulatory bodies (rules and regulations) involved.
- All transaction for GMP is done in cash.
- There is no written communication for Grey Market. Small slips of paper is the contract.
- There is no official dealer. All buying and selling is through word of mouth and trust only.
- The higher GMP means a higher possibility of IPO getting listed at a bumper price.
- Fire Rating of a IPO is the measure of how popular is the IPO in terms of expected return.
- GMP activity can start before the price band announcement.
