Define: Active Market

UK Accounting Glossary

Definition: Active Market


Quick Summary of Active Market


An active market is a market that routinely experiences high transaction volumes. There is usually a small spread between bid and ask prices, since there are so many buyers and sellers who are interested in trading.




What is the dictionary definition of Active Market?

Dictionary Definition


A market for assets of a particular class in which transactions occur often and in relatively high volumes.

This concept is important in fair value accounting.

If there is no active market, then up-to-date pricing information may potentially be scarce and it will accordingly be inappropriate to value an asset by marking to market. In such examples, an asset may need to be valued using a recognised pricing model (perhaps marking to model).

Assets for which there is rarely an active market may include customised or complex derivative products.


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Full Definition of Active Market


In finance, An Active Market is a market in which there are frequent and large volumes of transactions.

Many investors are interested in active markets because they can be traded, even in rather large quantities, without affecting the price. Securities within active markets usually have low bid-ask spreads.


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Examples of Active Market in a sentence


Poland is the most active market in Central Europe.
These factors created a more active market in foreign exchange and facilitated the use of the GBP£ for financing balance of payments purposes.


Active Market FAQ's



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Active Market. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. November 17, 2019 https://payrollheaven.com/define/active-market/.
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Active Market. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/active-market/ (accessed: November 17, 2019).
American Psychological Association (APA):
Active Market. PayrollHeaven.com. Retrieved November 17, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/active-market/

Definition Sources


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This glossary post was last updated: 27th January 2019.