thinly traded security

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Thinly Traded Security

An inactive or infrequently traded bond or stock. Thinly traded securities are usually traded in small batches, approximately five shares at a time. Thinly traded securities are fairly illiquid and may be difficult to sell in a downturn. Their prices are also volatile because a small change in demand can greatly affect the price. Thinly traded securities are sometimes called cabinet securities because they are kept in cabinets on the trading floor until they are needed. See also: Cabinet crowd, Inactive post.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

thinly traded security

A security that trades with little volume. Institutional investors usually exclude these securities from their portfolios because of the large price changes that would occur if trades of any significant size took place.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Companies that use such third-party valuations for thinly traded securities, known as tier two assets, "can't simply take the numbers as gospel," Jason Plourde, a professional accounting fellow in the SEC's office of the chief accountant, told an American Institute of CPAs meeting in December.
For thinly traded securities, trading costs are almost invariant with respect to trade size, and spread-related payments account for their largest fraction.
For thinly traded securities, days during which no trades take place will frequently occur.