Actively Traded Securities: Key Insights and Legal Definitions

Q: Why is the classification of actively traded securities important?

This classification allows for exemptions from certain trading restrictions, facilitating more fluid trading.

Q: How can I find out if a security is actively traded?

You can check financial reports or market data that provide information on trading volumes and public float values.

Definition & Meaning

Actively traded securities are financial instruments that have a significant level of trading activity. Specifically, these securities must have a worldwide average daily trading volume (ADTV) of at least one million dollars. Additionally, the issuing company must have common equity securities with a public float value of at least 150 million dollars. This classification is important as it provides an exemption from Regulation M, which limits the trading of existing securities by participants involved in a public offering of those securities.

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Legal Use & context

This term is commonly used in securities law and financial regulation. Actively traded securities are relevant in contexts such as public offerings, compliance with trading regulations, and investment strategies. Understanding this classification can help investors and companies navigate legal requirements and make informed trading decisions. Users can manage certain related processes using legal templates from US Legal Forms, which are drafted by qualified attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A technology company has an average daily trading volume of $1.5 million and a public float of $200 million. This company qualifies as an actively traded security.

Example 2: A retail company with an average daily trading volume of $800,000 would not be classified as actively traded, despite having a public float of $160 million. (hypothetical example)

Comparison with related terms

Term	Definition	Key Differences
Publicly Traded Securities	Securities that are traded on public exchanges.	All actively traded securities are publicly traded, but not all publicly traded securities are actively traded.
Illiquid Securities	Securities that do not have a significant trading volume.	Illiquid securities lack the trading volume required to be classified as actively traded.

Common misunderstandings

What to do if this term applies to you

If you are considering investing in actively traded securities, ensure you understand the associated regulations and requirements. You may want to consult with a financial advisor or legal professional for tailored advice. Additionally, you can explore US Legal Forms for templates that can assist you in managing related legal processes.

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Quick facts

Minimum average daily trading volume: $1 million
Minimum public float value: $150 million
Measurement period: Two full calendar months or 60 consecutive days prior to filing