Investor's wiki

Corner A Market

Corner A Market

What Does "Corner A Market" Mean?

To corner a market means to obtain an adequate number of shares of a specific security type, like those of a firm in a niche industry, or to hold a huge commodity position to have the option to control its price. The term infers that the market has been backed into a corner, and there is no place for the market to move to track down different dealers and buyers. An investor needs deep pockets to have the option to corner a market since it means obtaining critical physical assets. It can likewise mean to collect a major share of economic activity in a specific area. A telephone company that rules 90% of the remote market could be said to have cornered the market.

Grasping "Corner A Market"

Large institutions can frequently corner a market through legal means. A company that has cornered the market has a huge competitive advantage compared to others operating in a similar market. Nonetheless, any time a company has a large market share, it could be investigated by the Department of Justice's Antitrust Division — particularly in the event that contenders grumble. To be sure, Microsoft confronted such a destiny in view of its large share of the computer operating system market.

With regards to cornering the market in shares, bonds, foreign exchange or commodities, the Securities and Exchange Commission and Commodity Futures Trading Commission control and monitor the securities and commodities markets, and endeavor to forestall and arraign illegal trading behavior.

Cornering the Market Illegally

More often than not, cornering the market is associated with illegal activity. Markets are intended to foster competition and take into consideration competitive price discovery. On the off chance that somebody has cornered a market by restricting the number of willing venders and buyers, this cycle breaks down and can require regulatory intervention to reestablish it.

One way examiners try to corner a market is by hoarding large measures of physical assets. One of the most renowned instances of hoarding happened in the silver market during the 1970s and mid 1980s when three brothers, known as the Hunt Brothers, attempted to accumulate silver to corner the market and drive up the price. After around 10 years the endeavor at long last failed when the brothers couldn't borrow any more money to keep buying silver. This made the price of silver crash when the market realized there were essentially no willing silver buyers left separated from the Hunt Brothers. So on the off chance that they couldn't buy silver, then the price was bound to fall.

Endeavors to corner the copper market during the 1990s and different markets after some time have likewise ended without progress.