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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.
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Investopedia explains '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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