Definition of regulatory arbitrage

This is where firms take advantage of loopholes in regulatory systems to avoid certain types of regulation.

This can be achieved by conducting business, creating products and services in certain locations that are outside the purview of regulators.

There are fears surrounding the possibility that British banks could engage in regulatory arbitrage and shift activity offshore to avoid disclosing bankers' pay and bonuses. [1]

Osborne accused of retreat on big bonuses

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