• Illiquidity occurs when a security or other asset cannot be easily and quickly sold or exchanged for cash without a significant loss in value.

  • Illiquid assets can be difficult to sell quickly due to a lack of willing and willing investors or speculators to purchase the asset, while actively traded securities tend to be more liquid.
  • Illiquid assets tend to have wider bid-ask spreads, greater volatility and, as a result, higher risk for investors.