The grey market is a market that largely runs on trust. It is a small set of people who give bids and offers for the IPO stock at various prices. Many investors and brokers look at the grey market as a rough indicator of the post-listing performance of the stock. There are unofficial contracts represented by slips of paper and the transactions are entirely based on mutual trust. There is nothing like an official contract or anything as a proof.

Grey market premium meaning is something easy to understand. The IPO grey market premium represents what the punters are willing to pay above the discovered price of the IPO. To understand; what is GMP in IPO markets one must understand how unofficially premiums are set for IPOs. It is entirely based on the demand and supply dynamics for the stock in question.