What does the term "effective date" refer to in the context of new securities?

The term "effective date" specifically refers to the date on which new securities may officially be sold to the public following their registration with regulatory authorities, such as the Securities and Exchange Commission (SEC) in the United States. This date is critical as it signifies the moment when the securities are cleared for sale following the completion of the registration process and any necessary waiting periods.

Once a security's effective date has passed, underwriters can begin to sell the newly issued securities, facilitating the fundraising for the issuer. It's important in the capital markets as it establishes the timeline for both issuers and investors, marking the transition from planning and regulatory approval to actual trading in the market.

The context of other choices brings clarity: the deadline for investor commitments and the date when the issuer files a prospectus do not define the moment securities can be sold; instead, they are part of the process leading up to the effective date. Additionally, while the start of the trading period relates to when trading begins, it does not specifically denote the permission to sell the securities, which is what the effective date encompasses.