DEFINITION of 'Sunshine Trade'

A high-volume transaction prematurely revealed to the market before the order is even entered. A sunshine trade is one which just due to the size of the position being taken, a move in the market will result. By revealing some or all of the specifics of the trade, the market can readily prepare itself for the outcome, rather than causing a giant ripple in the market place.

BREAKING DOWN 'Sunshine Trade'

Sunshine trades are meant to reduce confusion and speculation by investors by making the large transactions more transparent. This transparency leads to markets which are considered more reliable and "fair." An example of the opposite of a sunshine trade would be dark pool trading, where most traders do not know who is trading or the size of the transactions.

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RELATED FAQS
  1. How do sunshine laws help investors?

    Sunshine laws are U.S. federal and state laws that require regulatory authorities' meetings, decisions and records to be ... Read Answer >>
  2. Why are financial markets considered to be transparent?

    Understand the efficient market hypothesis and how it relates to financial markets. Learn why financial markets are considered ... Read Answer >>
  3. What's the difference between a capital market and the stock market?

    Learn about the differences between stock market and capital market. Identify several important stock markets and understand ... Read Answer >>
  4. 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 >>
  5. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
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    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily ... Read Answer >>
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