Grey Market or Grey Sheet Q & A

[BigBake1]

Grey Market Trading

Ok so next week starts new trading on the Greys for some of the summers biggest runners that were suspended two weeks ago. These securities no longer are quoted and therefore without MMs become very illiquid, here are four facts about them:

1. No recent bid or ask quotes are available because no market makers share data or quote such stocks. There is no quoting system available to record and settle trades.

2. All Grey sheet trading is moderated by a broker and done between consenting individuals at a price they agree on. The only documentation that can be publicly found regarding the trades is when the last trade took place.

3. Extremely illiquid. Grey sheet trading is infrequent, and for good reason... Difficult to trade, not advertised, difficult to follow the price, the least regulation possible, and hard to find any information on the stock.

4. Trades in grey market stocks are reported by broker-dealers to their Self Regulatory Organization (SRO) and the SRO distributes the trade data to market data vendors and financial websites so investors can track price and volume. Since grey market securities are not traded or quoted on an exchange or interdealer quotation system, investor's bids and offers are not collected in a central spot so market transparency is diminished and Best Execution of orders is difficult.

So with all that said, there will be no Bid or Ask displayed, the only information that will be fed to shareholders is simply total volume and trade completion time and size of trade. That is all folks, there will be no other information available. As you can see it is completely ran by the brokers and their ECN for matching trades and it is literally shooting in the dark guessing as to matching trades. The price does not have an orderly flow up or down like a quoted security it is completely random, if someone matches a trade at .0001 and then another matches a trade at .01 that is how much it will swing and yes some bounce thousands of percentile throughout the day.

How does one successfully match a trade? Find another willing to buy or sell for the exact amount of shares you have and an agreed upon price via PMs or Email. Otherwise just make a very good guess and hope it hits something.

This folks is what the OTC would be like without Market Makers, if you think they suck or believe in conspiracy theories of them manipulating prices well here is what it will be like without them. As I have stated thousands of times on these boards, the MMs have no interest in OTC securities.. absolutely none.. and everything is electronic trading without human intervention here when a security is quoted and DTC eligible. So from the time the input leaves your keyboard to the settlement no human has any part of your trade. On Monday some will have to call their broker to trade.

Each broker has different policies regarding the trading of these securities, it is best for each individual to check with brokers to find out if they will be able to do online trades or call them in.