Sure, insert any other similar tactic in place of a short ladder and I'd be interested in the discussion of why or why not it should be allowed.
I'm also interested in discussing whether or not ETFs should exist. I wonder at some point if you just kind of eliminate price discovery and prop up zombie companies.
i assume you mean passive index investing (via the instrument called ETF).
And no, it won't eliminate price discovery unless there's some 80-90% of the transactions that is only passive. And if that's the case, an enterprising active manager would spot this discrepency, and profit from the abitrage.
So in effect, passive investing is piggy-backing off the price discovery of active managers, and this reaches a balance.
