Non-Open Market

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DEFINITION of 'Non-Open Market'

Describes an agreement to purchase or sell shares made directly with the company. Non-open market transactions, as the name suggests, don't take place on a market exchange like most purchase and sale transactions, but instead are private transactions. While these transactions occur outside of the traditional market, they still need to be filed with the SEC. These transactions can be referred to as non-open market acquisition or disposition.

BREAKING DOWN 'Non-Open Market'

The most typical non-open market transactions occur when insiders exercise their options. If an insider has an option to buy a certain amount of shares at a set price, they are buying the shares from the company and not through an exchange. However, once the shares have been purchased, the insider can sell the purchased shares into the open market.

Another type of non-open market transaction is a tender offer where a corporation offers to repurchase shares from outside shareholders.

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RELATED FAQS
  1. What is the difference between open-market and closed-market transactions?

    Insiders often are blessed with owning a significant portion of a company's shares. This shared ownership is often in the ... Read Full Answer >>
  2. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  3. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
  4. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
  5. What is the difference between derivatives and options?

    Options are one category of derivatives. Other types of derivatives include futures contracts, swaps and forward contracts. ... Read Full Answer >>
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    In a rights offering, rights are distributed to shareholders based on the number of shares they already own. What Is a Rights ... Read Full Answer >>

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