Active breach

An active breach happens when a trade or decision causes a limit to be crossed. Buying a stock that takes an issuer to 11% under a 10% cap is active. So is buying an excluded security, or drawing more credit than a borrowing limit allows.

An active breach is usually expected to be corrected at once, without the cure period a passive breach may have. The UCITS Directive’s softer remedy, correction as a priority objective for sales, applies to limits exceeded for reasons beyond the fund’s control. An active breach is, by definition, not one of those.

Pre-trade checks exist to prevent active breaches; in Acclimetry, proposed trades can be checked against the same rules before execution. A breach found after the trade is grouped into a case with an owner and service-level clocks. See active vs passive breach and the UCITS breach rules.