Market Participants and Their Role in Efficiency

Rebecca is a research analyst at a mid-sized investment firm, closely monitoring the equity markets for investment opportunities. Recently, she has noticed a significant rise in the activity of various market participants in the trading platform used by her firm. During a meeting with her team, she discusses the impact of different types of market participants on liquidity and price discovery within the equity markets.

Rebecca identifies three main groups of market participants in the equity market: institutional investors, retail investors, and market makers. Each group plays a fundamental role in market efficiency and behavior.

Which of the following statements best reflects the role of these market participants in enhancing market efficiency?