Grey market FAQ

1. What is grey market trading?

Grey market trading refers to the over-the-counter (“OTC”) trading of new shares conducted after the trading hours of Hong Kong Stock Exchange (“HKEX”) on the trading day before the official listing. These transactions are matched through brokers' internal systems and are not conducted through the HKEX system.

2. When is the grey market trading period?

Grey market trading generally takes place on the trading day before the officially listing, from 16:15 to 18:30. For half-day trading, the trading period is from 14:15 to 16:30.

3. Can margin financing or short selling be used in grey market trading?

Grey market trading supports trading by both cash accounts and margin accounts but 100% margin is required. Short selling is not supported.

4. What types of orders are available in grey market trading?

Enhanced limit orders are supported (valid only during the grey market trading period). Any unfilled orders will be expired once the grey market trading is closed.

5. Why do grey market prices vary between different brokers?

Grey market trading is a form of OTC transactions and it is matched through each broker’s internal system; thus, the matching results and prices may differ. Price discrepancies are normal.

6. How are grey market trades settled?

Filled shares are settled on the second trading day after the official listing date (L+2), where L is the listing day.

7. What are the risks of grey market trading?

The main risks include large price volatility, lower liquidity, non-guaranteed settlement and potential manipulation; Additionally, trading system failures or delays may occur; the listing of share may be delayed or cancelled; order may be cancelled and funds may be frozen. It is more suitable for experienced investors.

8. Why do grey market prices differ from the official opening price on the listing day?

Because grey market trading is a form of OTC transactions and it is matched through each broker’s internal system and independent from the HKEX trading system. Consequently, the prices may not be consistent.

9. What are the purchasing power restrictions in grey market trading?

The net cash received from selling grey market stocks is frozen due to order or listing uncertainty and cannot be used to buy other stocks until either the listing is successful or cancel.

Example: If Stock A are sold for HKD 2,000 in the grey market, the HKD2,000 will be frozen. During this freeze period, the purchasing power for other stocks is zero, but it can be used to buy back Stock A.

10. How will the transaction order be processed if the new share listing is delayed or cancelled?

• Cancellation of listing: All transaction orders will be cancelled; funds and/or stocks generally will be returned one trading day after the listing is cancelled.

• Postponement of listing: Executed orders will remain valid. Outstanding orders will be cancelled.

11. Typhoon and Black Rainstorm Warning trading arrangements:

In the event of special circumstances that causing Grey Mart not available, Webull will issue a notification as soon as possible.

12. Can grey market shares be used for margin financing?

Both cash and margin accounts can trade grey market shares, but grey market shares cannot be used as collateral for margin financing. Other eligible stocks can be used as collateral to generate purchasing power.