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.

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.


Investment dictionary. . 2012.

Look at other dictionaries:

  • arm’s length — adj. Distant, not intimate; describes a good faith, fair market transaction by parties with relatively equal bargaining power, in which neither one forces the other to accept terms. The Essential Law Dictionary. Sphinx Publishing, An imprint of… …   Law dictionary

  • Arm's length principle — The arm s length principle (ALP) is the condition or the fact that the parties to a transaction are independent and on an equal footing. Such a transaction is known as an arm s length transaction . It is used specifically in contract law to… …   Wikipedia

  • Arm's Length Transaction — A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm s length transaction is to ensure that both parties in the deal are acting in their own self interest and… …   Investment dictionary

  • arm's length — 1) Denoting a transaction entered into by unrelated parties, each acting in their own best interests in paying or charging prices based on fair market values. In the preparation of financial statements it is normally assumed that all transactions …   Accounting dictionary

  • arm’s length — /ɑ:mz leŋθ/ adjective ♦ arm’s length transaction a transaction which is carried out by two parties with no connection between them (resulting in a fair market value for the item sold) ♦ to deal with someone at arm’s length to deal as if there… …   Dictionary of banking and finance

  • arm's length — 1) Denoting a transaction in which the parties to the transaction are or behave as if they are unrelated parties. For example, a transaction between two subsidiaries of the same parent organization could only be said to be at arm s length if it… …   Big dictionary of business and management

  • arm’s length transaction — A transaction at *fair market value between unrelated parties, or a transaction made as if it were between unrelated parties for example, All the sales between the corporation’s overseas branches are made at arm’s length …   Auditor's dictionary

  • arm's length transaction — Said of a transaction negotiated by unrelated parties, each acting in his or her own self interest; the basis for a fair market value determination. A transaction in good faith in the ordinary course of business by parties with independent… …   Black's law dictionary

  • market internalization advantages — Conditions that allow a corporation to exploit the failure of an arm s length market to deliver goods or services efficiently. Bloomberg Financial Dictionary …   Financial and business terms

  • Market value — For values of entire markets, see Market size. Market value is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although… …   Wikipedia

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