DEFINITION of 'Negotiated Market'

A type of secondary market exchange in which the prices of each security are bargained out between buyers and sellers. In a negotiated market there are no market-makers or order matching, instead buyers and sellers actively negotiate on the price at which a transaction is finalized either directly or through the use of brokers. These markets are considered very inefficient as the time, effort and lack of transparency in pricing are large issues to be dealt with.

BREAKING DOWN 'Negotiated Market'

Negotiated markets exist and function via the basic principle of supply and demand. Buyers produce demand for a given security or asset by entering bid orders to buy the security at a specified amount and price, while sellers create the supply for the security by entering ask orders, again for set amounts and prices.

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