Regulatory arbitrage definition
Regulatory arbitrage. ’ means that if a bank cannot do it, but a hedge fund can because a bank is regulated, and a hedge fund is not, I am going to do it in the hedge fund. That is regulatory arbi- trage. That is merely one example. There are no hedge fund regula- tions now on money laundering. If you are a hedge fund, you have no antimoney laundering obligations right now. Proposed regs only. It has been four and a half years.
Regulatory arbitrage a practice whereby firms capitalize on loopholes in regulatory systems in order to circumvent unfavorable regula- tion[s].