[ad_1]
A restricted market is a market where the government has more control over the exchange rate than other markets, often seen in currency exchanges. The aim is to ensure safety, but it can limit opportunities for investors.
A restricted market is a type of market in which there is a great deal of government control over the exchange rate within that market. Typically, government regulations will have more influence on how that market works than is true with other markets that tend to change based on a broader range of events and economic circumstances. A tight market is often considered a situation that occurs with currency exchanges, but it can be found in other types of market situations as well.
One of the easiest ways to understand the concept of a restricted market is to consider the exchange rate surrounding a currency issued by a specific nation. When the market is restricted, the value of that currency is directly linked to the currency issued by another nation, usually through the use of government regulations. The end result is that the exchange rate for that currency will change according to what is happening with the second currency, rather than other economic factors such as the financial stability of the issuing country.
The general objective of a restrictive market is to make use of government laws and regulations to ensure that the market remains relatively safe. When managed to best effect, the market is less susceptible to potential scams or investment offers that may be somewhat questionable. In some situations, the degree of restrictions present in the market can be somewhat prohibitive, leading investors to choose to focus attention on assets that are not traded in that particular market.
A restricted market is not considered the most controlled of all market situations. A locked market, where certain transactions are not allowed to take place, is generally considered to be the most closely managed type of market situation. By contrast, a free market enjoys few, if any, actual government regulations and restrictions, with a host of economic factors directly influencing the movement in value of assets traded within that market.
Detractors of a restricted market often consider this type of situation to prevent free enterprise, effectively limiting opportunities for investors in the market. Supporters of a restricted market point out that having government regulations in place can often prevent manipulation of that market and actually prevent some investors from losing money. There is no universal agreement on how much regulation is too much, so it is sometimes difficult to decide if a particular market is really restrictive.
Smart Asset.
[ad_2]