Perfectly competitive financial markets

Perfectly competitive financial markets

Markets in which no trader has the power to change the price of goods or services. Perfect capital markets are characterized by certain conditions: (1) Trading is cost less, and access to the financial markets is free; (2) information about borrowing and lending opportunities is freely available; and (3) there are many traders, and no single trader can have a significant impact on market prices.

Perfectly Competitive Financial Markets

Markets with perfect competition. That is, no single trade can affect prices and all trades are costless. This makes the market accessible to the widest possible number of participants. Perfectly competitive financial markets can only occur when all information is accessible to all market participants. See also: Efficient markets theory.