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...The Bank of England’s Prudential Regulation Authority, which oversees insurers, previously raised concerns about superfunds and regulatory arbitrage, and said they should only be used as a stepping stone...
...The IMF is calling for the application of a globally consistent consolidated capital standard to limit incentives for regulatory arbitrage by insurers shifting business to locations where rules are less...
...Between them, they arbitrage regulatory risks every bit as skilfully as price discrepancies in Treasuries. This should not be forbidden in the way snakes at Mardi Gras are....
...Instead of zeroing in on the risks of the arbitrage’s existence, which were demonstrated very clearly in 2020, the question prompts TBAC to dig into what makes the arbitrage so profitable....
...Security investors only take on the precise pieces of risk they want....
...As an industry built to arbitrage risk, should we be surprised insurers have little appetite to underwrite increasingly inevitable climate-related weather events?...
...In short, we believe Deutsche is proactively managing the risks in this key portfolio....
...Instead, it’s an arbitrage opportunity that gives banks the chance to sidestep the discount window, the lender-of-last-resort funding the Fed was created to provide when it was chartered in 1913....
...“You could end up having the most amazing regulatory regime in Europe around climate and carbon but losing your industrial base, listings or capital to the US; regulatory arbitrage is to be feared.”...
...So why were weaker banks allowed to get away with such naked accounting arbitrage to make themselves look less weak? The accountants themselves were no check, obviously....
...Because Treasuries are considered risk-free securities, the leverage embedded in these trades could reach stratospheric levels....
...Most of the time this arbitrage keeps ETFs closely tied to their indices. However, when the bond market freezes, the arbitrage breaks down. APs can’t sell the bonds....
...to figure out whether something is a Ponzi scheme or not, because superficially, I mean, there’s an awful lot of stuff in a capitalist economy that involves well, you invest some capital and you take a risk...
...You know it’s fairly priced otherwise there would be an arbitrage.”...
...And the potential for arbitrage is significant: using the most optimistic method available under the GHG could result in a carbon footprint between 4.6 and 6.7 times smaller than the most pessimistic method...
...These markets are vital for financing governments, for monetary policy transmission and for the hedging of interest rate risk for banks, investors and corporations....
...New international tax rules will restrict the scope to profit from arbitrage and curb a race to the bottom in corporate tax rates. That will remove an important driver of shareholders’ returns....
...“The probability that this goes to zero is way less, particularly after the SEC approving these ETFs, which takes away some of the downside risk,” he said....
...The two prices typically converge as the futures contract nears expiry; traders say the trade generates up to a 15 per cent annualised return for little risk....
...It’s a high-risk product that looks low risk, offers supposedly all-weather income unless there’s volatility or a bear market, and often comes with leverage levels that invite a total wipeout....
...This vast arbitrage between Treasuries and their futures worries too many people for that....
...As Bryce noted last week, the approval of spot Bitcoin ETFs has mostly been a chance to cash out of arbitrage trades....
...By expanding beyond financial sanctions, the US risks spreading itself too thin and losing credibility....
...China’s equity sell-off has been driven by worries over weak economic growth amid a housing market slump, as well as fears among foreign investors of mounting US sanctions on Chinese companies, and the risk...
...The risk of regulatory arbitrage remains....
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