What does market transparency facilitate?

Market transparency is fundamentally about the availability and accessibility of information regarding market activities, which includes quotes, trades, and other relevant data. When markets operate transparently, participants have easy and inexpensive access to this information.

This availability helps ensure that all market participants can make informed decisions based on the same set of data. It enhances the efficiency of markets by reducing information asymmetry, where one party might have more or better information than another. Greater transparency leads to better price discovery and fairer trading conditions, reducing the potential for manipulation or abuse.

While regulatory compliance is important, it does not directly define market transparency. Restricted access to trading information and concealment of trade prices fundamentally contradict the principle of transparency, as these practices would limit the availability of crucial information necessary for participants to make informed investment decisions. Therefore, easy and cheap access to quotes and trades exemplifies the essence of market transparency.