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 ?
This creates the potential for a race to the bottom, with employers competing on labour costs through regulatory arbitrage.
It represents a decisive shift away from a fragmented regulatory approach and will reduce the possibility of regulatory arbitrage or forum shopping and close gaps in the regulatory system.
It is important to avoid regulatory arbitrage and race to the bottom types of behaviour that could weaken the resiliency and robustness of the global financial market infrastructure.
Panelists will review shortfalls in general collateral, allocation methodology, the drop in volume, leverage ratios, risk-weighted assets, and return on capital, CCPs, and the disappearance of global regulatory arbitrage.
Opportunities for Regulatory Arbitrage and Resultant Weakening
Mallya is a case of over-stretching and over-leveraging, while Roy is the case of exploiting regulatory arbitrage or the loopholes in regulation," Bandyopadhyay said.
5% in real terms in 2013, mainly due to declining cession rates as a result of receding regulatory arbitrage opportunities and regulatory changes, according to Swiss Re's Global Insurance Review 2013 and Outlook 2014/15.
A point to consider when addressing regulatory arbitrage misuse is that a social entrepreneur (or existing nonprofit corporation) that chooses to form (or convert to) a benefit corporation is expected to have altruistic motives.
The Financial Stability Board set out to clarify the term shadow banking, develop approaches for monitoring, and explore measures to address regulatory arbitrage and systemic risk.
The levels of policyholder protection differ from one state to another, which has created opportunities for Takaful operators to pursue regulatory arbitrage, according to a new report from A.
Finally, allowing Islamic banking windows to continue in the QFC would create regulatory arbitrage opportunities between the State and the QFC.
In order to address the aforesaid corporate governance issues, there is urgent need for implementation of 'Consolidated Supervision Framework', where both the Corporate and Bank Regulators, are working to minimize Risks of Regulatory Arbitrage.

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