Financial markets turn disagreement into prices. Investors differ over cash flows, risk, time horizons and the future, and trading converts those competing views into a market price. One wonders whether that mechanism weakens when machines increasingly trade with machines. That is a useful question, but “the death of price discovery” risks assuming the conclusion before the evidence is considered. A more balanced starting point is that artificial intelligence may change price discovery rather than eliminate it. AI can process data at a scale no human desk can match, identify relationships across markets and react rapidly to new information. The Bank for International Settlements (BIS) describes the financial system itself as an information-processing system and argues that successive generations of AI could materially alter asset management, intermediation and financial stability. The question is whether better information processing also produces better markets under stress.
First dis…
