Market transparency means that participants have all the existing information about it, which must be complete, clear and truthful.
This condition is strictly necessary for the correct operation and the achievement of efficiency in the markets.
The nature of market transparency assumes that each of the protagonists involved has the ability to make consumption or production decisions (as appropriate) with the highest level of information available regarding the conditions of each sector.
Importance of market transparency
As indicated, the fact that a market is transparent or not is an especially important condition when studying its level of efficiency .
That is, if the participants need a high expenditure of resources to obtain information in a complete and real way, this usually translates into lower degrees of transparency. Therefore, inefficiency is generated.
When speaking of broad and useful information, we mean prices and quantities of goods and services. Likewise, the essential characteristics referring to their quality. Thanks to data of this type, the producing agents and the consumers acquire a better capacity to choose between different alternatives.
A market that is not transparent will hardly function adequately, especially in markets such as the financial or the stock market. In these sectors, the volume and importance of the data are the basis of the decision-making of the operators.
When carrying out investment or similar operations, it is necessary to have data that is true to reality and that does not hide or distort the complete market map.
It is for the aforementioned that the different international laws on economic matters stimulate market transparency. This, through very diverse mechanisms, such as public presentations of income statements .