Exempt Market Overview

An exempt market security is a security which is distributed under an exemption from the prospectus requirement. Being prospectus exempt means that an issuer does not have the same reporting requirements as those issuers who are required to file a prospectus. Because of this there is generally less information disclosed to investors, however this can lower costs typically associated with a public offering. Exempt market securities are generally illiquid, however due to this fact they are not subject to the systemic risks associated with the stock market.

Exempt Market Dealers (EMDs) are fully registered securities dealers who engage in the business of trading in prospectus exempt securities, or any securities to qualified exempt market clients. EMDs may focus on certain market sectors (e.g. oil and gas, real estate, minerals, technology, etc.) or may have a broad cross sector business model. Clients of EMDs include companies, institutional investors, accredited investors, or eligible investors who are qualified to purchase exempt securities pursuant to an offering memorandum.

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