Reg M Trading Restrictions on Participants
Chapters in this video
- 0:00 Distribution trigger: magnitude plus special selling efforts
- 1:29 The liquidity ladder: three-tier restricted period
- 2:41 Restricted period extends past pricing until participation completes
- 3:14 Nasdaq passive market making: bid cap and daily purchase limit
- 4:21 Strict short sale prohibitions and the bona fide purchase exception
- 5:28 How trading restrictions and short sale rules fit together
- 5:54 Rapid-fire exam recap
What this video covers
- What separates a distribution from ordinary trading: both magnitude AND special selling efforts must be present
- The three-tier restricted-period ladder tied to average daily trading volume (ADTV) and public float thresholds
- Why actively traded securities ($1 million ADTV and $150 million float) are completely excepted from the restricted period
- Why the restricted period ends at completion of participation, not at pricing, and how thatε»ΆδΌΈs the underwriter's restriction
- How Nasdaq passive market making caps bids at the highest independent bid and limits daily net purchases to the greater of 30% of average daily trading volume or 200 shares
- When the passive market making carve-out disappears: stabilizing bids, at-the-market offerings, and best efforts offerings
- Why short sales during the restricted window trigger strict liability that bars purchasing the offering, and the one narrow bona fide purchase exception
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