Open market

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Open market.

In an open market, any investor with the money to pay for securities is able to buy those securities.

US markets, for example, are open to all buyers. In contrast, a closed market may restrict investment to citizens of the country where the market is located.

Closed markets may also limit the sale of securities to overseas investors, or forbid the sale of securities in specific industries to those investors.

In some countries, for example, overseas investors may not own more than 49% of any company. In others, overseas investors may not invest in banks or other financial services companies.

The term open market is also used to describe an environment in which interest rates move up and down in response to supply and demand.

The Federal Reserve's Open Market Committee assesses the state of the US economy on a regular schedule. It then instructs the Federal Reserve Bank of New York to buy or sell Treasury securities on the open market to help control the money supply.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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165(a) for a decline in the value of stock that was acquired on the open market for investment.
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