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What is a Transparent Market?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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Transparent markets are markets where the lines of communication between investors and issuers of the securities are open and easily accessed in either direction. With a transparent market, it is possible for investors and others who have a stake in the performance of a given stock or security to easily access trade information that is relevant to the stock. The transparent market is not restricted just to access by investors; in fact, the quote information is widely available to the general public.

One of the advantages of a transparent market is that there are few, if any, surprises for the prospective investor. Anyone who wishes to follow the ups and downs of a given security in a transparent market may do so. This means that individuals who are considering the possibility of investing funds into a given market have the opportunity to access all relevant details about a given stock, including how it compares to other options on the same market.

From this perspective, a transparent market serves as a great way to study the movement of stocks and other options before making any type of investment. Financial counselors often direct newcomers to a particular transparent market and educate the potential investor in how a market works by using case studies from the market. Because the investor can study the marketplace with ease, it is possible to quickly begin to build a solid understanding and make informed decisions on the placement of orders within the market.

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Because of the nature of a transparent market, investors may freely interact with company officials in order to verify or receive further clarification on data that is currently available to the general public. This degree of interaction can often help an investor to make a decision about a given investment opportunity when the general information leaves a few questions that the investor considers important.

At the same time, it is important to note that a transparent market does not mean that investors will have access to proprietary information. The interaction between company officials and investors tends to focus on discussions regarding information that is widely available.

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