ar·​bi·​trage | \ ˈär-bə-ˌträzh How to pronounce arbitrage (audio) \

Definition of arbitrage

 (Entry 1 of 2)

1 : the nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies
2 : the purchase of the stock of a takeover target especially with a view to selling it profitably to the raider


arbitraged; arbitraging

Definition of arbitrage (Entry 2 of 2)

intransitive verb

: to engage in arbitrage

Examples of arbitrage in a Sentence

Recent Examples on the Web: Noun Authorities also blasted Ant for sub-par corporate governance, disdain toward regulatory requirements, and engaging in regulatory arbitrage. Fortune, "Chinese regulators order Ant Group to focus on payments, stop short of breakup," 27 Dec. 2020 Many hope to make money from this regulatory arbitrage, including these financial firms. The Editorial Board, WSJ, "Your New Climate 401(k)," 15 Dec. 2020 The coronavirus pandemic that has kept millions of shoppers at home has also emboldened such resellers, whose high-tech arbitrage — legal in most countries — is bringing grief for everyday shoppers. NBC News, "Good luck finding a PlayStation 5: Walmart and other retailers battle fast-buying 'bots'," 8 Dec. 2020 But financial institutions can use their existing liquidity to meet the criteria needed to tap this cheap source of funding, opening the door for an arbitrage strategy with government bonds and the ECB’s deposit facility, which charges minus 0.5%. Andrew Stuttaford, National Review, "The Capital Note: Interest Rates at Four Thousand Year Lows (What Could Go Wrong?)," 13 Oct. 2020 By then, Ponzi’s postal arbitrage scheme had already begun to unravel, and Massachusetts Gov. Calvin Coolidge had ordered the state’s Attorney General to investigate. Daniel Akst, WSJ, "The Original Ponzi Schemer," 15 Oct. 2020 Investopedia and robo-advisory firm Betterment have used Animal Crossing as a way to explain market concepts basic and more advanced, such as supply and demand, arbitrage, and how to conduct fundamental and technical analyses for real stocks. Berber Jin,, "How ‘Animal Crossing’ Is Preparing Players to Trade Stocks," 7 Oct. 2020 Advertising agencies engage in arbitrage, buying ad inventory at a discount from publishers and selling it at a markup to their own clients. Gilad Edelman, Wired, "Ad Tech Could Be the Next Internet Bubble," 5 Oct. 2020 Convertible arbitrage, the strategy on which billionaire traders such as Ken Griffin and Michael Hintze cut their teeth, is delivering healthy returns for managers once more. Andrew Stuttaford, National Review, "The Capital Note: Forward Guidance & the Fate of Cities," 17 Sep. 2020 Recent Examples on the Web: Verb Localized cancer, headline risk—call it what you will, these episodes create wrinkles in the investment time-space continuum that long-term investors can use to arbitrage between perception and reality. Adam Seessel, Fortune, "Valuation: Why Health Insurer Anthem Is Worth Investing In," 19 Nov. 2019 Were this only a matter of firms arbitraging better rates and swapping back to dollars, the Americans would be dominated by banks. Washington Post, "Beware the Buyer’s Strike in Corporate Bonds," 3 Apr. 2019 One explanation is that foreigners have direct access to the market, and so large price gaps can be arbitraged away quickly. Nathaniel Taplin, WSJ, "A Chinese Oil Slick for the Dollar?," 18 Sep. 2018 One risk is that, as local investors clamour to buy them, CDRs will trade at a huge premium to their foreign counterparts. Because of capital controls, there is no channel for arbitraging between onshore and offshore markets. The Economist, "China tries to lure its tech firms into listing at home," 10 May 2018 As Ars Technica points out, arbitraging cheap power is a widespread business tactic in industries as diverse as aluminum production and marijuana cultivation. David Z. Morris, Fortune, "Bitcoin Miners Can Now Be Charged Extra for Electricity, New York Power Authorities Say," 17 Mar. 2018 Of course, cryptocurrency mining is hardly the first industry to arbitrage electricity prices to make some good's production more profitable. Megan Geuss, Ars Technica, "New York power companies can now charge Bitcoin miners more," 16 Mar. 2018 Inside the Big Plan to Make Ethereum Go Mainstream Share this episode with your friends Another option is arbitraging price differences between Korean exchanges, Bae said. Julie Verhage,, "Bitcoin's 43% Arbitrage Trade Is a Lot Tougher Than It Looks," 9 Jan. 2018 Another puzzle with anomalies is why they are not arbitraged away. The Economist, "“Factor investing” gains popularity," 1 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'arbitrage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of arbitrage


1875, in the meaning defined at sense 1


1857, in the meaning defined above

History and Etymology for arbitrage


borrowed from French, literally, "decision-making, judgment," going back to Old French, "judgment pronounced by an arbiter," from arbitrer "to pass judgment" (borrowed from Latin arbitrārī "to consider, judge, decide," verbal derivative of arbitr-, arbiter "onlooker, arbiter") + -age -age

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Time Traveler for arbitrage

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The first known use of arbitrage was in 1857

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Last Updated

11 Jan 2021

Cite this Entry

“Arbitrage.” Dictionary, Merriam-Webster, Accessed 3 Mar. 2021.

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More Definitions for arbitrage



English Language Learners Definition of arbitrage

business : the practice of buying something (such as foreign money, gold, etc.) in one place and selling it almost immediately in another place where it is worth more


ar·​bi·​trage | \ ˈär-bə-ˌträzh How to pronounce arbitrage (audio) \

Legal Definition of arbitrage

1 : the purchase of a security, commodity, or foreign currency in one market for the purpose of immediately selling it at a higher price in another market
2 : the purchase of the stock of a takeover target especially for the purpose of selling it to the raider for a profit

History and Etymology for arbitrage

French, literally, arbitration, decision-making

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