Gray market


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Gray market

Describes the sale of securities that have not officially been issued to firms other than the underwriting syndicate. This type of market serves as a good indicator of demand for a new issue in the public market.

Gray Market

Trade using unofficial and unregulated, but still legal, means. In securities, a gray market typically refers to trade in bonds or stocks not yet issued. These sales are contingent upon the issuance actually taking place, and are sometimes considered benchmarks for how successful the issuance will be. Another example of a gray market is the pharmaceuticals industry, in which buyers in different countries sometimes pay very different amounts. Buyers in the more expensive country may travel to the other country to buy their medicines, creating a gray market.
References in periodicals archive ?
Consumers who wish to discern gray market goods from the original offerings can use such cues as brand specifications and the nature and existence of warranties.
The biggest impact of the gray market is the erosion of profits and margins for both dealers and OEMs - and it's usually the dealers that feel the pain the worst.
They even went so far as to join other manufacturers in bringing a suit to the Supreme Court that would have outlawed imports to the gray market.
OEM products enter the gray market most often through unscrupulous resellers or distributors that take advantage of legitimate discount programs that OEMs use to enter new markets or expand in existing markets.
One example of how a firm discovered gray market distribution of its products is illustrated in the comments of a U.