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.

RELATED TERMS
  1. Arm's Length Transaction

    A transaction in which the buyers and sellers of a product act ...
  2. Third-Party Transaction

    A third-party transaction is a business deal involving a buyer, ...
  3. Secure Option ARM

    A type of payment-option adjustible-rate mortgage with a fixed-interest-rate ...
  4. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  5. Overnight Delivery Risk

    The risk that occurs as a result of conducting transactions between ...
  6. Credit Checking

    A check performed on the financial backing of the counterparties ...
Related Articles
  1. Investing

    Arm's Length Transaction

    An arm’s length transaction describes business deals in which the buyer and seller act independently and with no interest in the other’s benefit.
  2. Investing

    3 Growth Opportunities For ARM Holdings

    ARM Holdings highlighted several growth opportunities in its most recent roadshow presentation. Here are three of the large opportunities it talked about.
  3. Trading

    Introduction To The Arms Index

    Developed in 1967 by Richard Arms, this volume-based breadth indicator can be applied over various time periods.
  4. Investing

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  5. Personal Finance

    Option ARMs: American Dream Or Mortgage Nightmare?

    Option adjustable rate mortgages could make or break your home-buying experience.
  6. Trading

    Calculating the Arms Index (TRIN)

    The Arms Index is a technical analysis indicator that’s used to predict price movements in the market on an intraday basis.
  7. Personal Finance

    This ARM Has Teeth

    Find out how to avoid getting bitten when your mortgage rate resets.
  8. Investing

    Smartphone Tech Leader ARM Inks a Big IoT Deal

    Global chip leader ARM Holdings' (NASDAQ: ARMH) products reach over 80% of the world's population, and its partners routinely ship more than 4 billion chips each quarter utilizing its technologies. ...
  9. Personal Finance

    The Best Candidate For an Adjustable Rate Mortgage

    Adjustable-rate mortgages aren't for everyone, but they make sense if you are a short-term homeowner or can pay off the loan before it readjusts.
  10. Investing

    Japan’s Softbank to Purchase ARM Holdings (SFTBY, ARMH)

    Softbank has agreed to buy UK chip-maker – ARM Holdings – for a whopping $32 billion in an all-cash deal.
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 >>
  6. Why is the Arms Index (TRIN) important for traders?

    Learn more about the Arms Index, or TRIN, and how traders and chartists use the Arms to measure market volatility and trading ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center