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Time-Zone Arbitrage
(redirected from Time Zone Arbitrage)

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Time-Zone Arbitrage
A form of stale price arbitrage where the pricing discrepencies are due to the primary markets for the underlying securities being closed at the times that the fund is traded. Note that time zone arbitrage is sometimes mistakenly used if it were a pure synonym for stale price arbitrage. These are not synonyms since stale prices can also be due to illiquid stocks or bonds that are not traded frequently.

Time-Zone Arbitrage
A form of arbitrage in which an investor takes advantage of price discrepancies that occur when some stock markets are open while others are closed. For example, one may buy a stock on an American exchange when it has experienced a rally, guaranteeing that the same stock will surge when Asian exchanges open the next day. This is used for international stocks.


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Market timing and time zone arbitrage are not just US phenomena - European domiciled funds could also be at risk if they contain equities traded on exchanges which close prior to their order cut-off time or NAV calculation point.
 
 
 
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