Regulatory Arbitrage

Filed Under » ,
Dictionary Says

Definition of 'Regulatory Arbitrage'

A practice whereby firms capitalize on loopholes in regulatory systems in order to circumvent unfavorable regulation. Arbitrage opportunities may be accomplished by a variety of tactics, including restructuring transactions, financial engineering and geographic relocation. Regulatory arbitrage is difficult to prevent entirely, but its prevalence can be limited by closing the most obvious loopholes and thus increasing the costs associated of circumventing the regulation.
Investopedia Says

Investopedia explains 'Regulatory Arbitrage'

An interesting example of regulatory arbitrage came from Blackstone's 2007 IPO. In an unusual move, Blackstone went public as a master limited partnership in an effort to avoid the higher tax rates imposed on corporations. In order to retain these tax advantages, Blackstone also had to avoid classification as an investment company. Through carefully negotiating the tax regulations, Blackstone hopes to exploit a 'regulatory arbitrage' between the tax code's legal definitions and economic substance.

Related Definitions

Search results for

'Regulatory Arbitrage'

  • The Pitfalls Of Financial Regulation

    http://www.investopedia.com/articles/economics/10/pitfalls-financial-regulation.asp
    ... Regulatory Arbitrage and Moral Hazard It goes against the grain to think that rules
    can actually make something more dangerous, but this often proves true when ...

  • Dodd-Frank's Consequences - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0212/Dodd-Franks-Consequences.aspx
    ... Regulatory Arbitrage Bank accountability and oversight, supervision and liquidation
    are given robust treatment; the regulation of the shadow banking system ...

  • Trade Takeover Stocks With Merger Arbitrage

    http://www.investopedia.com/articles/stocks/06/mergerarbitrage.asp
    ... that increases the risk of participating in merger arbitrage is the ... financing problems,
    due diligence outcomes, personality clashes, regulatory objections or ...

  • Actively Managed ETFs: Risks And Benefits For Investors

    http://www.investopedia.com/articles/exchangetradedfunds/08/actively-managed-etfs.asp
    ... to the Securities and Exchange Commission (SEC) for regulatory review before ...
    Transparency Challenge No.3: Arbitrage Another transparency concern involved fund ...

  • Series 7 Study Guide - Packaged Securities - Introduction ...

    http://www.investopedia.com/exam-guide/series-7/packaged-securities/default.asp
    ... Arbitrage opportunities are reduced as they create and redeem shares with the ... Though
    the regulatory trend has been toward greater disclosure, it is less than ...

  • Series 7 Study Guide - Equities - Shares from Conversion ...

    http://www.investopedia.com/exam-guide/series-7/equities/share-conversion.asp
    ... Convertibles and Arbitrage Convertible securities are tools used in arbitrage,
    the simultaneous buying and selling of a security. ...

  • Hedge Funds Go Retail

    http://www.investopedia.com/articles/mutualfund/07/mutual_fund_retail.asp
    ... to implement them; there's the market neutral, convertible arbitrage, long/short ...
    diversification benefits, but also demand a firmer regulatory environment to ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Event Risk ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/event-risk.asp
    ... 14.36 Cash Flow; 14.37 Bond Value and Price; 14.38 Arbitrage-free Valuation
    Approach; 14.39 Typical Yield Measures; 14.40 Assumptions ...

  • CFA Level 1 Study Guide - Ethics and Standards - Disciplining CFA ...

    http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/disciplining-members.asp
    ... 14.36 Cash Flow; 14.37 Bond Value and Price; 14.38 Arbitrage-free Valuation
    Approach; 14.39 Typical Yield Measures; 14.40 Assumptions ...

  • The Deutsche/Sprint Telecom Tie-Up

    http://stocks.investopedia.com/stock-analysis/2009/The-DeutscheSprint-Telecom-Tie-Up-S-DT-T-VZ-VOD0917.aspx
    ... reading, check out Trade Takeover Stocks Wither Merger Arbitrage.) Sprint's business ...
    more, any deal between big players could face stringent regulatory scrutiny ...

Related Articles

Partner Links