Regulatory Arbitrage

Regulatory Arbitrage

The practice of making small changes to one's company so as to come under the jurisdiction of a different regulator agency with more lenient rules. For example, a corporation unwilling to pay corporate taxes to the state of California may move its head office to Arizona, outside the jurisdiction (in most circumstances) of the California tax authorities. See also: Jurisdictional Arbitrage, Federal Deposit Insurance Act of 2005.
References in periodicals archive ?
The two different regimes for the same business model with different requirements not only create disparity and confusion but also result in regulatory arbitrage.
The two different regimes for the same regulated activity with different requirements not only creates disparity and confusion but also results in regulatory arbitrage,' SECP said.
Two different regimes for the same regulated activity with different requirements not only create disparity and confusion, but they also result in regulatory arbitrage,' it said.
Greg Buchak, University of Chicago ; Gregor Matvos, University of Texas at Austin and NBER; Tomasz Piskorski, Columbia University and NBER; and Amit Seru, Stanford University and NBER, "Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks" (NBER Working Paper No.
Additionally, we see a tendency to relocate bank-like activities to investment firms or third-country branches that are out of the SSM's scope, thus leading to a fragmentation of supervision and possibilities for regulatory arbitrage.
Without consistent implementation, the common standards will remain fragmented, leaving the door wide open to a race to the bottom in regulation, regulatory arbitrage, higher risks and future crises.
They're exploiting a regulatory arbitrage, born of the growing complexity of our regulatory system, and its occasional slowness.
A uniform standard of care across all types of investment products means both consistent consumer protections and a level regulatory framework preventing one type of investment product from regulatory arbitrage," the reps write.
had raised concerns with Valdis Dombrovskis, one of the European Commission's most senior officials, about "creeping regulatory arbitrage," a reference to undercutting rivals with less stringent rules.
Better coordination has reduced the risk of regulatory arbitrage, and address the threat that banks will be, as former Bank of England Governor Mervyn King memorably put it, "international in life but national in death".
However, some is pure regulatory arbitrage - action taken by firms to reduce specific regulatory requirements without any commensurate reduction in risk.
Better coordination has reduced the risk of regulatory arbitrage, and addressed the threat that banks will be, as former Bank of England Governor Mervyn King memorably put it, "international in life but national in death.

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