Sulja Bros. Building Supplies, Ltd (SLJB)

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Who Trades on the Gray Market?


Spell it with an “e” or an “a” or call it by its other name -- gray sheets – the gray market is unlike other exchanges. This unregulated marketplace was established to trade stocks waiting in the wings to be listed on larger exchanges or to trade those unable to qualify for the big exchanges. Not every stock is associated with an IPO; some gray market stocks are issued by start-up or spin-off companies looking to test the waters before spending the time and money it takes to woo a major exchange. You’ll also find fallen angels on the gray market -- stocks once traded on major exchanges such as the Nasdaq that may have suffered financial misfortunes or failed to meet Securities and Exchange Commission requirements.

Only people with lots of money and an attraction to risky stocks wind up as players on the gray market. Investors trade stock via unique “private trading platforms” such as SharesPost, SecondMarket or simply a consortium of accredited investors, explains the website Stock Rock and Roll. Since securities traded on the gray market are not registered with the SEC, not every investor is interested in these types of financial deals. Investors can also expect to ante up healthy commissions that are higher than those charged for transactions on bigger exchanges when they dabble in the gray market for stocks.


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