What is classified as an 'exempt market'?

An 'exempt market' refers specifically to a market where securities are not required to be registered with a regulatory authority before they are sold to investors. This exemption usually applies to certain types of private placements, where issuers can sell securities with fewer regulatory hurdles compared to public offerings. The primary advantage of an exempt market is that it allows businesses to raise capital quickly and efficiently, catering to sophisticated or accredited investors who are deemed capable of assessing the risks involved without the same level of regulatory oversight.

In contrast, a market where all securities are publicly traded would be characterized by a high level of regulatory scrutiny, and thus does not fit the definition of an exempt market. A market that is subject to extensive government regulation would also not be classified as exempt, as it would involve strict compliance with regulations aimed at protecting investors. Finally, while a market with low liquidity may present challenges for investors, it does not inherently define the exempt status of a market.