The evolution of price discovery in us equity and derivatives markets

Date

2019

Authors

Wallace, D.
Kalev, P.S.
Lian, G.

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Journal article

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Journal of Futures Markets, The, 2019; 39(9):1122-1136

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Abstract

This study considers the evolution of price discovery in the S&P 500 E-mini futures and the corresponding exchange traded fund (SPY ETF) over the period January 2002 through December 2013. The study reports evidence that the E-mini futures dominate price discovery at the beginning of the sample period. However, from 2007 onward both the SPY ETF and E-mini futures contribute similar portions to the price discovery process. The level of price discovery is significantly influenced by volume measures and relative levels of transaction costs for both securities.

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Copyright 2019 Wiley periodicals, Inc.

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