A shadow market is a type of private market in which investors have access to shares of stock that are currently not being offered for public trading. Typically, a market of this type does require that investors who wish to participate meet specific criteria before being allowed to execute an order. Unlike other types of markets, the shadow market is usually unregulated, which means that there are few if any governmental regulations that protect the interests of those who choose to buy and sell in this market.
Participation in a shadow market usually requires an investor to provide proof of having a net worth that is over a minimum amount. This minimum amount is often set by some sort of exchange commission or agency, and tends to constitute the major part of whatever regulation is actually involved with trading in the market. By requiring a minimum net worth, the potential for dealing with investors that are interested in buying or selling larger lots of stocks is greater, which in turn means that investors have the chance to earn greater returns based on the ability to acquire larger volumes of those shares.
