ar·​bi·​tra·​geur | \ ˌär-bə-(ˌ)trä-ˈzhər How to pronounce arbitrageur (audio) \
variants: or arbitrager \ ˈär-​bə-​ˌträ-​zhər How to pronounce arbitrager (audio) \

Definition of arbitrageur

: one that practices arbitrage

Examples of arbitrageur in a Sentence

Recent Examples on the Web

But there is a straightforward way to minimize the discount: Make the holding company as similar to the underlying asset as possible so that arbitrageurs can directly compare them. Stephen Wilmot, WSJ, "One of the Best Investments in History Becomes a Headache," 24 June 2019 An arbitrageur could profit by selling short the stocks in New York and buying the futures contract. Burton G. Malkiel, WSJ, "Anatomy of a Stock-Market Crash," 18 Sep. 2017 Levine implicated Ivan Boesky, an arbitrageur, who then implicated Martin Siegel (HBS ’71), formerly of Kidder Peabody but then working for Drexel Burnham Lambert. Duff Mcdonald, Newsweek, "Harvard Business School and the Propagation of Immoral Profit Strategies," 6 Apr. 2017 Stewart’s book brought the reader inside the room of the most private meetings and discussions among the likes of the famed arbitrageur Ivan Boesky and the financier Michael Milken, as well as those prosecuting them, led by Rudy Giuliani. Andrew Ross Sorkin, New York Times, "An Insider-Trading Tale That Reads Like a Thriller," 7 Feb. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'arbitrageur.' 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 arbitrageur

1870, in the meaning defined above

History and Etymology for arbitrageur

arbitrage + -eur (as in entrepreneur) or -er entry 2

Note: Despite appearances, arbitrageur is not borrowed from French, which uses the derivative arbitragiste.

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Statistics for arbitrageur

Last Updated

12 Sep 2019

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The first known use of arbitrageur was in 1870

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Financial Definition of arbitrageur

What It Is

An arbitrageur is a person who exploits the differences in the price of a given security by simultaneously purchasing and selling that security.

How It Works

For example, if Company XYZ's stock trades at $5 per share on the New York Stock Exchange and the equivalent of $5.05 on the London Stock Exchange, an arbitrageur would purchase the stock for $5 on the NYSE and sell it on the LSE for $5.05, pocketing $0.05 per share. Theoretically, the prices on both exchanges should be the same at all times, but arbitrage opportunities arise when they're not.

Arbitrageurs also try to exploit price differences created by mergers. In some cases, they purchase the shares of companies that are the targets of purchase offers, hoping to pocket the difference between the trading price and the eventual cash payment resulting from the merger. In theory, arbitrage is a riskless activity, but merger arbitrage is not riskless - -there is a chance the merger will not happen, and the price of the target's shares would probably fall in that event.

Why It Matters

Institutions are usually the biggest arbitrageurs -- the large volumes of shares they trade can make millions in profits even if the spread is small (and it usually is just pennies). The transaction costs that would normally eliminate any profit individual investors could hope for are often relatively minimal for institutions.

The main creator of arbitrage opportunity used to be a lack of real-time communication about prices in other markets, but technology has reduced the number of arbitrage opportunities. The relatively few arbitrage opportunities that do exist are elusive and don't last for long -- when people realize that a security is cheaper on one exchange than another, their interest in exploiting the opportunity will drive up the price of the "cheap" security and drive down the price of the "expensive" security until there is no longer a price difference. In a sense, arbitrageurs ensure equilibrium in the markets.

Source: Investing Answers


ar·​bi·​tra·​geur | \ ˌär-bə-ˌträ-ˈzhər How to pronounce arbitrageur (audio) \
variants: or arbitrager \ ˈär-​bə-​ˌträ-​zhər How to pronounce arbitrager (audio) \

Legal Definition of arbitrageur

: one that practices arbitrage

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