Arm's Length Market

DEFINITION of 'Arm's Length Market'

A financial market consisting of parties that have no relationship or contact with one another aside from the transaction at hand. In the United States, the majority of exchanges are considered to be arm's length, where buyers and sellers are matched according only to the details of a transaction. The two parties will often never know they were involved with each other.

BREAKING DOWN 'Arm's Length Market'

An arm's length market is based on the principle that parties should have equal influence in transactions. Furthermore, it removes opportunities for deals derived from personal relationships, which may manipulate the market.

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RELATED FAQS
  1. Are arm's length transactions always better than transactions not at arm's length?

    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily ... Read Answer >>
  2. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
  3. Are there any pure arm's-length markets?

    Learn about arm's length markets and transactions. Explore situations when different market participants may not be at arm's ... Read Answer >>
  4. How do you make working capital adjustments in transfer pricing?

    Understand how working capital adjustments are applicable to transfer pricing. Learn about the arm's length standard and ... Read Answer >>
  5. How do regulators ensure that markets are conducted at arm's length?

    Learn about arm's length transactions and how the Investment Advisers Act allows stockbrokers to sell securities based on ... Read Answer >>
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    Learn more about the Arms Index, or TRIN, and how traders and chartists use the Arms to measure market volatility and trading ... Read Answer >>
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