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All of these terms GMP, Kostak Rates and Subject to Sauda are used in unofficial market called the Grey Market. It is the market where IPO shares are bought and sold before the shares get listed on the stock exchange.
Let’s understand each of these term:
| GMP | Kostak Rate | Subject to Sauda | |
| Meaning | GMP or Grey Market Premium is the per share premium in the grey market over the IPO issue price. | Kostak rate is the price or premium a buyer pays to purchase IPO application from seller. Whether IPO applicant receives allotment or not, Kostak price needs to be paid by the buyer. |
Subject to Sauda is also a fixed rate or premium to purchase the IPO application in the grey market. However, it is different from Kostak rates as it is only paid out by the buyer when seller get the allotment. If no allotments happens, deal is cancelled. |