Political arbitrage
Encyclopedia
Political arbitrage is a trading
strategy which involves using knowledge or estimates of future political activity to forecast and discount security values. For example, the major factor in the values of some foreign government bonds is the risk of default, which is a political decision taken by the country's government. The values of companies in war-sensitive sectors such as oil and arms are affected by political decisions to make war.
Legal trading must be based on publicly available information. However there is a grey area involving lobbyists and market rumours. Like insider trading
there is scope for conflicts of interest
when political decision makers themselves are in positions to profit from private investments whose values are linked to their own public political actions.
Trader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
strategy which involves using knowledge or estimates of future political activity to forecast and discount security values. For example, the major factor in the values of some foreign government bonds is the risk of default, which is a political decision taken by the country's government. The values of companies in war-sensitive sectors such as oil and arms are affected by political decisions to make war.
Legal trading must be based on publicly available information. However there is a grey area involving lobbyists and market rumours. Like insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
there is scope for conflicts of interest
Conflicts of Interest
"Conflicts of Interest" is an episode from the fourth season of the science fiction television series Babylon 5.-Arc significance:* Garibaldi begins to work for William Edgars. In the process Garibaldi is reintroduced to his ex-girlfriend, Lise, who is currently married to Edgars.* The "Voice of...
when political decision makers themselves are in positions to profit from private investments whose values are linked to their own public political actions.