Under the SEC’s Rule 10b-18 safe harbor, an issuer’s open-market repurchases on any single day are limited to no more than 25% of the stock’s Average Daily Trading Volume (ADTV). ADTV is measured over the four calendar weeks preceding the week of the buyback and uses U.S. market volume only. This is a safe harbor, not a hard cap—buying more than 25% is possible but falls outside the safe harbor and can raise manipulation risk.
Key details (volume-specific)
o Daily limit: Total “Rule 10b-18 purchases” by the issuer and any affiliated purchaser must not exceed 25% of ADTV for that day.
o Weekly block alternative: Once per week, an issuer may make one “block” purchase instead of using the 25% allowance for that day, provided no other Rule 10b-18 purchases occur that same day; that block is excluded from the ADTV numerator when you compute the four-week ADTV. (“Block” generally means ≥$200,000, or ≥5,000 shares with ≥$50,000, or ≥20 round lots totaling ≥150% of that day’s trading volume.)
o Market-wide trading suspension exception: In the trading session immediately following a market-wide halt, the volume cap is temporarily raised to 100% of ADTV (other conditions still apply).
o ADTV definition window: The SEC defines ADTV for Rule 10b-18 as the four calendar weeks preceding the week of the buyback; U.S. volume only counts.
Reminder: Rule 10b-18 is a non-exclusive safe harbor. Failure to meet it doesn’t automatically mean a violation, but you lose the safe harbor’s protection for that day. Other time, price, and manner conditions also must be satisfied to rely on the safe harbor.
SEC
Quick example
If the four-week ADTV is 2,000,000 shares, the safe-harbor daily capacity is 500,000 shares (25% × 2,000,000). In one week you could choose one day to make a qualifying block purchase instead of using that 25% on that day; that block would not be added into the four-week ADTV input going forward.
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