[corford]

Based on a comment further up, my understanding is people buying on the secondary markets are not actually buying the shares. They're just offering $X to an employee now in return for being entitled to the full sale price of that employee's shares ($Y) immediately after IPO. $Y could be higher or lower than $X (that's the agents risk) but at no time does the agent actually own the shares.

[gyardley]

People buying on secondary markets often directly buy shares. They only resort to derivatives when they're unable to buy directly due to stock restrictions.

[corford]

Aren't most pre-IPO shares restricted though (company has ROFR, company board can block sale of shares to a third party they don't like etc.)?

[gyardley]

Yes, but the type of restriction matters. Sometimes it's just a ROFR at the same price, and that alone isn't enough to deter either buyers or sellers from directly buying and selling.