Green shoes in stocks refer to an option granted by the issuer to the lead underwriter, which authorizes the lead underwriter to oversell the shares with the same issue price not exceeding 65,438+05% of the underwriting amount to investors. Within 30 days from the date of listing of securities, the lead underwriter has the right to choose to buy the issuer's shares from the centralized bidding market according to market conditions, or to require the issuer to issue additional shares and place them with investors who apply for subscription for the oversold part.

When a stock goes public, there will be three types of people, one is the issuer of the stock; The second is the lead underwriter of stocks; The third is investors. Green shoes mean that the three lead underwriters have certain options, and they can choose whether to implement or not, or what to implement, and the lead underwriter has a right to require the issuer to issue more than 15% of the shares to investors, so green shoes are a choice.

The green shoe mechanism allows the lead underwriter to sell 15% of the shares before the shares are issued, and this part of the funds will be temporarily kept by the lead underwriter. After buying, investors can't own the stock for the time being, because the stock has not been issued.

Benefits of the green shoe mechanism: With the green shoe mechanism, the lead underwriter can choose to issue 65,438+05% more shares, so that the stock will not rise too much after listing. If it is broken, the lead underwriter will buy in the secondary market because of the green shoe mechanism, which will better stabilize the stock price and prevent the stock from falling too badly.