Arbitrage is the practice of taking advantage of a price difference between two or more markets.
套利是利用两个或多个市场之间的价格差异的行为。
In currency
arbitrage, traders buy currency cheap in one market and sell it at a higher price in another.
在货币套利中，交易者在某一市场低价买入货币，然后在另一市场高价卖出。
Stock market
arbitrage involves buying a stock in one market and simultaneously selling an equivalent derivative in another to profit from price discrepancies.
股票市场套利涉及在一个市场买入股票，同时在另一个市场卖出等价的衍生品，以利用价格差异获利。
Interest rate
arbitrage occurs when an investor profits from differences in interest rates across countries or financial instruments.
利率套利发生在投资者从不同国家或金融工具之间的利率差异中获利时。
Risk
arbitrage involves buying the stock of a company that's about to be acquired, hoping to profit from the difference between the current price and the acquisition price.
风险套利涉及购买即将被收购的公司的股票，期望从当前价格与收购价格之间的差额中获利。
Currency futures
arbitrage exploits pricing inefficiencies between spot and futures markets for the same currency.
货币期货套利利用同一货币的即期和期货市场的定价效率低下的情况。
Convertible bond
arbitrage is a strategy where an investor buys convertible bonds and shorts the underlying stock to profit from price misalignments.
可转换债券套利是一种策略，投资者买入可转换债券并做空基础股票，以从价格错位中获利。
Geographic
arbitrage refers to earning a higher income or standard of living in a low-cost location while maintaining access to a high-value market.
地理套利指的是在低成本地区获得较高收入或生活水平，同时保持对高价值市场的访问权限。
In sports betting,
arbitrage occurs when a punter takes advantage of different odds offered by different bookmakers on the same event.
在体育博彩中，套利发生在赌徒利用不同博彩公司对同一事件提供的不同赔率时。
Time
arbitrage is the concept of investing in an opportunity today that will be worth more tomorrow due to time value of money.
时间套利是指今天投资于一个机会，由于货币的时间价值，明天这个机会将更有价值。
The group's major operating problems include flaws in its corporate governance mechanism and poor legal awareness, flouting regulatory compliance requirements, foul play for regulatory arbitrage, leveraging market dominance to exclude competitors, and hurting consumers' legitimate rights and interests, which led to consumer complaints, said Pan Gongsheng, deputy head of the People's Bank of China.
中国人民银行副行长潘功胜表示，该集团的主要运营问题包括公司治理机制缺陷、法律意识淡薄、违反监管合规要求、利用市场主导地位排挤竞争对手以及损害消费者合法权益等，从而引发消费者投诉。
Opportunities for commercial and industrial peak-valley power price arbitrage are spurring uptake for behind-the-meter energy storage in China, the report said.
"Healthcare investment is turning from market speculation to real investment, and from arbitrage to value investment.
When it comes to high inflationary risks around the globe, Gambardella said relative price stability is the key condition for dynamic innovation-driven growth, and AI constitutes an ideal tool for arbitrage in case of international retail price differences.
当谈及全球范围内的高通胀风险时，Gambardella表示，相对价格稳定是实现动态创新驱动增长的关键条件，而人工智能则构成了一种理想工具，用以应对国际零售价格差异中的套利问题。
The new rule will help optimize the sector's structure by elevating entry thresholds, clarifying penalties, simplifying exit mechanisms, and avoiding regulatory arbitrage, she said.
"The reform measures will enhance the coverage and penetrability of financial regulation, address long-standing issues such as regulatory gaps, regulatory overlaps and regulatory arbitrage in the financial sector, and promote unified and standardized financial products and services," Wang said.
This will help avoid a regulatory vacuum and arbitrage that arise from a segmented regulatory system.
Arbitrage opportunities under such circumstances will be very limited for VCs and PEs, he said.
Arbitrage means buying a security in one market and, at the same time, selling it for more on another market.
The implementation of the new rule will help avoid improper transfer of interest, risk contagion and regulatory arbitrage, conducive to strengthening the country's macroprudential policy framework, the PBOC said in a statement on Thursday.
This is mainly due to short-term arbitrage factors such as the interest rate differences between China and the United States brought by repeated US Federal Reserve interest rate hikes, inverted yields between the two countries and the renminbi's depreciation against the US dollar.
To avoid improper transfer of interest, risk concentration and contagion as well as regulatory arbitrage, the PBOC has drafted the rules and will collect public opinion through Sept 30, the central bank said on Tuesday.
Market-neutral or arbitrage strategies will be better implemented," he said.
The product serves as an important hedging product for quantitative trading and provides room for various quantitative strategies such as alpha strategies and index arbitrage.
To address the feared issue of potential crowding out of bank deposits, and to prevent arbitrage as well as the so-called pro-cyclical effects under stressful conditions, the PBOC has come up with a tiered design of e-CNY wallets with different caps on transactions and balance amounts.
The commission said it would continue to stringently rectify financial irregularities and crack down on regulatory arbitrage.
The published statement said some Internet platforms had violated the law, such as providing financial services without licenses or doing business beyond the scope of their licenses, having a non-qualified corporate governance mechanism, engaging in regulatory arbitrage, taking part in unfair competition and damaging the legitimate rights and interests of consumers.
The aim is to align business rules and standards with regulation to fend off arbitrage.
Investors will thus be able to conduct cross-market arbitrage, he said.
Hence, we insist on applying unified regulations for the same type of business activities and are firmly against regulatory arbitrage," Guo Shuqing, chairman of the CBIRC, said during a video speech at the Singapore Fintech Festival on Dec 8.
The exchange rate should be attractive for users, while it can prevent arbitrage activities of speculative capital," said Ju Jiandong, a professor of finance at Tsinghua's CIFER.
Arbitrage is one of the fundamental ways to adjust assets' prices.
International financial centers have no fear of hot money, as the transparent and marketized mechanism will minimize arbitrage opportunities.
The global allocation of financial assets is determined by the nature of arbitrage for financial capital, and the boundaries of financial capital flows are blurred.
The globalization of financial capital presents an irreversible trend, which is determined by the financial capital's nature－seeking arbitrage opportunities globally.
Enterprises can choose the ways of financing, but there are certain differences determined by the cost of financial capital arbitrage.
It will also boost financing arbitrage and asset prices," said Zhang Xiaojing, deputy head of the National Institution for Finance and Development, a government think tank.
Banks need to take measures in advance to control nonperforming loans and use financial subsidies to reduce financial arbitrage and bad assets of small and medium-sized companies, said Zhang.
Macroeconomic indicators suggest that China may continue to implement a relatively loose monetary policy, but tighter regulations and macroprudential policies are needed to address financial arbitrage risks, especially when interbank borrowing costs decline, according to Liu Ligang, managing director and chief China economist at Citigroup.
"The current rates of small business loans are lower than home mortgage rates, providing space for arbitrage.
Regulators have repeatedly stressed on the prevention of arbitrage through banks' cooperation with other financial institutions such as trust companies.
With the economic recovery gathering pace, monetary authorities are more concerned about financial risks primarily related to leveraging and arbitrage in the financial system, as interest rates in the interbank market declined significantly, according to Li Zhennan, an economist with Goldman Sachs (Asia).
Arbitrage from issuing bonds and then buying structured deposits have started becoming attractive since the second quarter, as the market-oriented bond financing costs have become much lower than those of the banks' financial products, pushing the PBOC to implement targeted measures instead of broadly cutting the policy rates, Li said.
China's central bank may focus on maintaining ample liquidity in the financial system and curb financial arbitrage by pursuing a more flexible monetary policy stance and keeping the benchmark lending rates adaptive, as it did for three months in a row, analysts said on Monday.
The central bank has also strengthened the regulations on arbitrage activities in the financial system.
"The strategy of pre-IPO focus on short-term arbitrage will be abandoned gradually by the market, while the sector ushers in a new stage of competing for the ability to evaluate firms by core and long-term development potential," he said.
Regulators should also step up regulation of arbitrage to prevent loans from flowing into the housing market, the stock market and other types of investments, he said.
Some said the recent bond price drop was a normalization from an unconventional low interbank rate in March and April to reduce arbitrage risks within the financial system.
"It is a signal that the central bank is keen on preventing arbitrage in the financial sector.
The authorities also highlighted the need to tighten financial regulation and prevent funds from "simply circulating in the financial sector for the sake of arbitrage", according to the report.
"Since June, the rise of benchmark bond yields has indicated that the central bank might increase caution on risks related to financial arbitrage and asset bubbles, as the government has vowed to use financial resources to support the recovery of the real economy and prevent speculation in the financial system.
Long-term easing policies may lead to arbitrage activities in sectors that have received the preferential measures, which could lead to unfair competition in the market, he said.
It reflects the authorities' efforts in reducing regulatory arbitrage through channel business and multilayered transactions, said Moody's, which also warned that slowing economic growth and trade uncertainties may result in a challenging operating environment for financial institutions in China this year.
"The notice will greatly help prevent regulatory arbitrage, a practice whereby companies capitalize on loopholes in regulatory systems to circumvent unfavorable regulations, and therefore lead to a reduction of fake structured deposits by raising the cost," said Zeng Gang, deputy director-general of the National Institution for Finance and Development.
David Lipton, the International Monetary Fund's first deputy managing director, said: " (China's) Credit growth and corporate debt have been reduced thanks to concerted efforts to strengthen financial regulation, reduce regulatory arbitrage, and improve the framework for financial supervision.
"In April 2018, the People's Bank of China and three other financial regulators issued the guidance on the asset management business of financial institutions to address problems like regulatory arbitrage, multi-level nesting of WMPs, rigid payments, and circumvention of financial regulations.
Pan said the central bank will promote market-oriented interest rate reform and prevent "self cycling" of funds within the financial sector, which means investors are trading financial products for arbitrage purposes based on interest rate spreads, rather than injecting funds into the real economy.
The CBIRC will also keep watching policy arbitrage and shadow banking activities that will raise financial leverage, as well as financial risks in the housing sector by implementing prudent risk management standards on real estate development loans and mortgage loans, he added.
Bill financing, a kind of short-term and low-interest loan, was cited as the culprit for increased financial arbitrage.
Li identified fast-growing bill financing and short-term loans as risks, which may lead to "arbitrage" activities and further potential risks.
According to Securities Times, with interest rates in monetary markets falling, the bill financing rate has been dropping away from high-interest wealth management products since the second half of 2018, which left some arbitrage space for banks and enterprises.
Zheng Weihe, board chairman of Cowin Capital Group, pointed out private equity firms' previous arbitrage model, of investing before the IPO and immediately cashing out after, has come to an end.
"Deeper cooperation between Asian stock exchanges will also improve crossborder regulatory environment concerning securities, which will obviate cross-market arbitrage and check illegal behaviors, and help Asian exchanges seek cooperation and mutual benefits with US and European exchanges.
Although there have been some adjustments lately, there will be limited room of growth in the near future, but the ETF is a good arbitrage tool in the long term, according to Qiu.
With increased risk and compliance awareness, rule violations and regulatory arbitrage activities will largely decrease, and banks will become more rational in dealing with their urge for scale expansion.
"The yet-to-be-formed subsidiaries will operate according to the new asset management regulations and are therefore unlikely to be used by commercial banks as an instrument of regulatory arbitrage.
Such a move will enable regulators to promote fair market competition and curb regulatory arbitrage activities," she said.
Nicholas Zhu, an analyst with Moody's Investors Service, said in a research note that the coordinated and comprehensive regulation covering all asset management products reflects the government's focus on taking risk out of the financial system and helping reduce the scope for regulatory arbitrage.
This year, the regulator continued to fight against unsound corporate governance, violations of macroeconomic regulation, rule-breaking arbitrage via financial products across sectors, infringement of financial service consumer rights and interests, and fabrication of false insurance documents.
Another key target is to minimize regulatory arbitrage, thus cutting rent-seeking, according to the country's top financial regulators.
"We should minimize regulatory arbitrage and promote standardized development of the asset management business," said a document released after Wednesday's meeting.
"In the past, the difference in rules set by regulators of different financial sectors has provided the possibility for regulatory arbitrage.
Dong Dandan, a senior researcher at Foresee Fund, said the launch of the Shanghai crude futures will likely increase the trading volume and asset positions in New York and London due to possible arbitrage trading.
"During the last few years, a large amount of emerging business at commercial banks has capitalized on legal loopholes to circumvent regulation, with such regulatory arbitrage causing huge potential risks, said Zeng Gang, director of banking research at the Institute of Finance and Banking of the Chinese Academy of Social Sciences.
But the regulator will switch from short-term solutions, such as rectification and penalties, to long-term institutional improvement, to consolidate control of financial risk and fight against illegal activities, so that regulatory arbitrage and violations will not re-emerge," Zeng said.
Xiao Yuanqi, director of the CBRC's prudential regulation bureau, said regulators have been able to contain frequent eruptions of financial market chaos by stepping up efforts to investigate and punish such arbitrage activities last year.
Cliff Sheng, partner and head of financial services for Oliver Wyman Greater China, said that future fintech companies will differentiate themselves by pushing the frontiers of technological innovation as the window of regulatory arbitrage closes.
High-risk multi-tranche products with complicated investment structures, which could be used as arbitrage tools to channel money into stock, bond and property markets, will be limited by the new guideline, said a statement on the website of the People's Bank of China.
A rebound of capital inflows has been seen since the second quarter as the main reason to support a stronger yuan, when foreign investors saw arbitrage opportunities due to the interest margin between the yuan and the dollar, according to Cao.
As the opening of China's capital market will continue, the space for arbitrage due to the exchange rate gap between onshore and offshore markets will be gradually removed, the SAFE official said.
Given a fragmented and segmentary system might leave blind spots in supervision and lead to financial arbitrage, the introduction of the committee will help improve the effectiveness of regulation and address regulation challenges brought by increasingly mixed financial services, Lian said.
"This is credit positive as it would gradually dampen banks' incentive to engage in regulatory arbitrage, and reduce the risks in the shadow banking sector," it said.
Trading in index options will bring more arbitrage opportunities for investors, and will reduce the irrational fluctuations in the stock market, said an insider from the National Equities Exchange and Quotations, who declined to be named.
The sector will be screened for compliance risks, regulatory arbitrage, asset-liability mismatches and other major risks.
In the Chinese financial sector, non-performing debt, which is rising at a slower pace, may continue increasing, the shadow banking sector is too big and regulatory arbitrage is rising.
Yang further said the regulator will crack the whip on financial institutions indulging in irregular arbitrage, illegal transactions, wrongful profit-making and improper fees or charges.
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