What is Price Transparency?
Updated: March 28, 2012 at 4:18 AM
Price Transparency Definition. Price Transparency describes involves a process that assures that all market participants are afforded equal access to prices quoted for the respective security, commodity or currency. The process may mean the buyer and seller know the price and no intermediary is involved in the transaction. The term can also relate to the availability of pricing information to the public. High price transparency would allow the public to see the broad range of bid and ask prices for each security or financial instrument. Low price transparency would limit public access to some or all of these details. Since forex currencies are not traded on an exchange, this kind of transparency is not possible. However, reporting services can generally show the transaction values for interbank trades in the market. Typically, a forex broker must set his own quotes depending on his arrangement with his intermediary. If spreads are the same for one contract lot for all clients, then the prices can be said to be transparent.
Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.