what is ipo market

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what is ipo market

In the recent few days, the stoppage of Paytm has increased from Rs 11500 to Rs 21000-00 in the gray market. A few days ago, Paytm had announced to issue an initial public offer (IPO) of USD 3 billion by the end of this year. As a response to this, there has been a strong increase in the stock-stock of Paytm.

what is ipo market

Know what is IPO gray market?

Usually, when companies want to raise funds to accelerate their growth, they sell part of their stock in the stock market. This process is called Initial Public Offering or IPO. But the IPO gray market is an informal market in which the shares or applications of an IPO are bought and sold before they become available for trading on the stock market. It is also called the general market or over-the-counter market.

Talking about its legality and administration, since "IPO gray market" is an informal market. So it is natural that there are no rules to regulate it. Securities and Exchange Board of India (SEBI), stock exchanges and brokers have no role in this. They are bought and sold privately in cash.

What is Caustic Rate?

The cost rate is related to the IPO application. Hence, the rate at which an investor buys IPO applications before listing is called the costcut rate or costik rate.

Why do investors trade in the gray market?

When investors think the price of a company's shares is about to rise, it is an excellent opportunity for them to buy its shares before the company is listed. If an investor misses the deadline for IPO application or wants to buy more shares, they can approach the IPO gray market.

What are the benefits for companies in this?

For companies, the gray market is a great way to find out how their shares are in demand and how a company's shares may perform after listing. In addition, an IPO gray market can be used to know about the performance of a company's stocks after the goods are listed.

What are the concerns about the IPO gray market?

The IPO gray market, an informal market, operates outside the jurisdiction of SEBI. Hence no guarantee is given in this. All transactions are done on trust and counterparty risk basis. Therefore, there is little legal protection available to the parties in the event of the stoppack tanking i.e., the stock performing poorly.

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