can someone explain wtf "X is good for price discovery" means because it seems that people throw this phrase around and have no idea (or, at least, I certainly don't)
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One way of thinking about the phrase "X is good for price discovery" is by thinking about whether X conveys new information to the market. genuinely new information has permanent price impact, whereas other effects (such as e.g. rebalancing trades) only have temporary impact
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Makes sense! And I agree with this notion, I think In a lot of the times (and what I’m referring to here, which is hard without more context rip, sorry
) X is one of many markets? And here is where I lose the thread -
Like what does it mean for a market to be better or worse for price discovery than another, other than it being just less liquid, e.g.
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Hasbrouck's 1991 papers "Measuring the Information Content of Stock Trades" and "The Summary Informativeness of Stock Trades: An Econometric Analysis" are the sources I have referred to on this subject specifically
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