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Pricing Efficiency

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Pricing efficiency
Also called external efficiency; a market characteristic that prices at all times fully reflect all available information that is relevant to the valuation of securities.

Market Efficiency
The extent to which the price of an asset reflects all information available. Economists disagree on how efficient markets are. Followers of the efficient markets theory hold that the market efficiently deals with all information on a given security and reflects it in the price immediately, and that technical analysis, fundamental analysis, and/or any speculative investing based on those methods are useless. On the other hand, the primary observation of behavioral economics holds that investors (and people in general) make decisions on imprecise impressions and beliefs, rather than rational analysis, rendering markets somewhat inefficient to the extent that they are affected by people.


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According to ICAP, both companies see catastrophe swaps as offering customers increased pricing efficiency, lower frictional costs and transparency.
Financial markets today have more depth and liquidity and provide more information and pricing efficiency than ever before.
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