While CFDs are banned in the US, it is possible for investors around the world to trade in these contracts via the web. CFDs will provide a hedge against unforeseen price movements in Twitter’s IPO price as the IPO date approaches.

Many investors were surprised by the poor performance of Facebook when it listed, so there is some interest in CFDs relating to Twitter’s float. The social media giant will float its shares on the NASDAQ, with a possible initial listed value of $10 billion. Twitter’s Initial Public Offering has only recently been announced. As a result these markets are often able to offer goods and services at lower prices, or offer a greater range, than what existing local markets can achieve.Ī more recent example of a grey market in financial derivatives concerns the trading of Contracts For Difference (CFDs) related to Twitter shares. Grey markets exist outside of the usual market structures we have come to know. Recent estimates suggest online sales had reached $14.2 billion for the year ended August 2013. The popularity of this particular grey market is so strong that some of the most trenchant critics of online trading when it was first established, are now working within this market. Australian retailers have expressed considerable concern over the burgeoning online retail market, which has attracted the attention of shoppers due to its ability to provide cheaper, sometimes tax-free products. One example of a grey market is the growth in online shopping that has occurred in Australia. There may be no legal restriction on this activity but it does affect the profitability of those trading in the normal manner in the country where the good or service is sold. Goods and services may be acquired in one country and then legally brought into another country and sold. Grey markets differ in that they are not illegal, but they are not authorised or controlled in the usual way. For example a black market could arise in order to avoid taxes or price controls, or it could arise to meet unmet demand for illegal products or services. Black markets usually arise where trading is restricted in some sense.

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