Basically like an IOU when you buy. But i am not sure about the selling part.
Of course only the exchange can add iou tokens to the market, why would someone think they could sell a coin the don't possess yet?
Idk why this iou trading is so hard for people to understand. The exchange buys a bunch of ico tokens then starts a market with tokens that represent the ico tokens. People trade them like any other coin, when the coin becomes available the iou trading stops and the tokens the exchange has bought get distributed to whoever ends up with the iou tokens. The big winner is the exchange, they immediately get their btc spent on ico tokens plus some profit, then they get all the trading fee profits. Plus, they can add additional iou tokens at any point they want because nobody knows how many ico tokens they purchased. So when the price is high they can dump them and buy them back when it's low etc etc.
As far as I'm concerned it's a scam, but a trader can make profit by trading the futures just don't get caught with them at a high price.
I'm not big fan of IOU tokens trading.
BTW we don't see IOU tokens on Liqui lately.
Beats me whoever Invests in IOU. As if risk and liquidity wouldn not be sufficient without them.