There are risks associated with Grey Market, please read the Grey Market Trading Risk Disclosure Statement before you trade.
1. Introduction to Grey Market Trading
Grey Market is an over-the-counter (OTC) market, which is generally used in Hong Kong for pre-IPO trading of new stocks. Grey Market Trading takes place on the trading day before the IPO. Hong Kong stocks are usually traded through the HKEx system, but Grey Market Trading is not done through the HKEx system, but through the internal system provided by the brokerage firms.
Not all IPOs support Grey Market Trading, and only IPOs listed on the Main Board of the HKSE may offer Grey Market Trading. For stocks listed on the GEM Board, due to different issuance rules, the risk of dark market trading is relatively high, and Grey Market Trading is not available for the time being.
2. Grey Market Trading Hours
The trading hours of Grey market are 16:15 ~ 18:30 on the trading day before the official listing of the IPO.
If the day of Grey Market is half day, trading hours are 14:15 ~ 16:30.
Trading arrangements during typhoon and black rainstorm.
Typhoon Signal No. 8 or above/ Black Rainstorm Warning:
(1) Signal/Warning is lifted before 12:00 noon: Grey Market Trading will begin as usual at 4:15 p.m. (2:15 p.m. for half-day trading).
(2) Signal/warning will be lifted after 12:00 noon: trading will be stopped for the whole day.
(3) Signal/warning issued during the under-trading session: Under-trading will continue as usual until 6:30 p.m. (4:30 p.m. for half-day trading).
3. Order Types
The Grey Market currently only supports Limit Orders, and does not support the operation of edit orders. If you have the need to modify the order, you can first cancel the order, and then place a new order.
Grey Market Orders are only valid during the Grey Market trading hours.
4. Tick Size
|
Stock Price (HKD) |
Tick Size (HKD) |
|
0.01 – 0.25 |
0.001 |
|
> 0.25 – 0.50 |
0.005 |
|
> 0.50 – 10.00 |
0.01 |
|
> 10.00 – 20.00 |
0.02 |
|
> 20.00 – 100.00 |
0.05 |
|
> 100.00 – 200.00 |
0.10 |
|
> 200.00 – 500.00 |
0.20 |
|
> 500.00 – 1,000.00 |
0.50 |
|
> 1,000.00 – 2,000.00 |
1.00 |
|
> 2,000.00 – 5,000.00 |
2.00 |
|
> 5,000.00 – 9,995.00 |
5.00 |
5. Trading and Settlement Mechanism
1) Trading Mechanism
The Grey Market is support T+0 trading, and shares bought in the Grey Market can be sold in Grey Market on the same day.
2）Settlement Mechanism
Settlement of the Grey Market trades takes place on the second trading day after the Listing Day.
For example, if the Grey Market trading of an new stock A takes place on Friday, October 16, 2020, and the IPO A is officially listed on the HKEx on Monday, October 19, 2020, then the settlement date of the under-the-counter trading will be Wednesday, October 21, 2020.
6. Postpone or Cancel Listing
Postponement of listing: The executed order will be considered as valid and unfilled order will be cancelled.
Cancellation of listing: All orders will be cancelled on the grounds that the IPO has not been successfully listed on HKEx and the transaction fee and shares related will be refunded.
Change of listing terms and conditions: A change in the terms and conditions of the IPO will not affect the Grey Market unless the change results in cancellation of listing or postponement of listing, in which case, please refer to the above arrangement.
7. Market Data
1）Market Data Permission
The market data permission of Grey Market is independent with the HK stock market.
2) Grey Market Price
The rise and fall of the Grey Market price is calculated based on the issue price of the IPO stock.
After the close of the Grey Market, the Grey Maket price will be maintained until 0:00 on the Listing Day, after which it will be reset to the issue price, and the rise and fall will still be calculated on the basis of the issue price.
3) Price after listing and dark order price
Under-the-counter trading is not the same as being fixed by brokerage firms internally or by the exchange after listing. The performance of the under-the-counter price reflects the popularity of the IPO and investors' expectations of the IPO, and may have some reference value for the price movement on the first day of listing. However, the performance of the dark market only reflects the trading performance of the IPO at the brokerage firm and does not fully reflect market demand.
8. Fees
Fees and costs will be charged for your Grey Market orders，please refer to the Hong Kong Stock Exchange Fee Schedule.
9. FAQs
1) Why the orders being cancelled?
The following are all possible reasons for order rejection.
-
Errors in price differentials (please refer to the table of minimum units of price change).
-
Price changes of more than 50 change units
-
Orders in excess of 3,000 lots
-
Exceeding trading limits
-
Short selling
-
Suspension of stock trading
2) Does Grey Market Trading support the financing of securities?
Both cash and margin accounts support Grey Market Trading, require 100% margin, and cannot be shorted.
3) Why is there a difference between the dark order prices you see and other brokers?
The dark market is an over-the-counter (OTC) transaction, which is brokered through the internal system provided by the brokerage firm itself, so the price of the dark market will differ between different brokerage firms.
4) Why does the dark market display real-time market prices, but is manually refreshed after listing?
The dark market quotes have nothing to do with the underlying stocks, but are open to all users, including HK L0 users.
5) Why the opening price on the first day of listing is still the issue price, but not the closing price in the Grey Market?
A dark order is an over-the-counter transaction brokered internally by the brokerage firm, as opposed to a transaction brokered by the Hong Kong Stock Exchange after listing. The two quotes are independent.
6) Why was the order price reached but not filled?
Limited by liquidity issues, it is possible that the order price reached but the order not filled.