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.

Full Definition of Active Market

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

Examples of Active Market in a sentence

Poland is the most active market within 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

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Active Market. Payroll & Accounting Heaven Ltd. July 18, 2019
Chicago Manual of Style (CMS):
Active Market. Payroll & Accounting Heaven Ltd. (accessed: July 18, 2019).
American Psychological Association (APA):
Active Market. Retrieved July 18, 2019, from website:

Definition Sources

Definitions for Active Market are sourced/syndicated from:

  • Oxford Dictionary Of Economics
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

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