IPO Grey Market

• Vaid's ICS, Lucknow
• 21, Sep 2021

The digital payments and financial services firm Paytm has announced that it will raise investment through an initial public offer (IPO) from the Grey market.

What is Grey Market IPO?

• Grey Market IPO is an unofficial market where individuals buy/sell IPO shares or applications before they are officially launched for trading on the stock exchange.
• As it is an unofficial over-the-counter market, there are no regulations around it. All transactions are done in cash on a personal basis.

Any 3rd party firms like SEBI, Stock Exchange, or Brokers are not involved or back this transaction.

Grey market trading is done among a small set of people as there is no official platform or rules defined for this trading.

Two popular terms used in the IPO grey market are ‘Grey Market Premium’ and ‘ Kostak’.

Grey market premium is nothing but the price at which the shares are being traded in the grey market.

Kostak Rate is the rate at which an investor buys an IPO application before the listing.

Facts for Prelims

Stablecoin                

A ‘stablecoin’ is a type of ‘cryptocurrency‘, usually pegged to the current government-backed currency.

1. Most of the dozens of ‘stablecoins’ currently in circulation use the dollar as their benchmark asset, but many ‘stablecoins’ are also linked to other credit currencies issued by governments such as the ‘euro’ and ‘yen’ Huh.
2. As a result, unlike high-profile cryptocurrencies such as bitcoin and ethereum, the price of stablecoins fluctuates very little.
3. Stablecoins are very useful as they form a bridge between the currency of the Old World and the cryptocurrencies of the New World.
4. The first ‘stablecoin’ was ‘Tether’, which was created in the year 2014. After this many other ‘stablecoins’ have been created.