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Free Market
Source:
Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
Generally,
the open market where prices are determined by free and open competition
between buyers and sellers, where volume and prices are free to express
truly the prevailing conditions.
In the U.S., security exchanges are truly free and competitive
markets, free of any trading limits as to price fluctuation or as to positions
of traders, long or short. Commodity
exchanges, however, are subject to daily price fluctuation limits and,
for certain commodities, limits on positions of traders imposed by the
COMMODITY EXCHANGE AUTHORITY. All
forms of manipulation, by statute and administrative regulation, are forbidden
on both stock and commodity exchanges.
In
FOREIGN EXCHANGE, where exchange controls are imposed by various countries,
floating market rates for exchange transactions relative to specified
currencies may be actually floating rates "managed" by governmental
intervention, forward premiums and discounts being left to the interplay
of market forces in the foreign exchange markets.
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