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Regulatory Arbitrage: What’s Law Got To Do With It?

Author

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  • Langenbucher Katja

    (Goethe University Frankfurt am Main House of Finance, Theodor-W.-Adorno-Platz 3, Frankfurt, 60323, Germany)

Abstract

This paper explores regulatory arbitrage from a legal point of view. I start from the assumption that legislators will sometimes wish to prevent regulatory arbitrage and examine legal tools available to this end. To back up the underlying assumption, I present two perspectives on the phenomenon of regulatory arbitrage. One perspective stresses its competitive element, the other one focuses on instances of arbitrage as unwanted avoidance of a legal regime. It is suggested that from both perspectives we will find that – at least sometimes – regulatory arbitrage is unwanted. I move on to illustrate how EU and U.S. legislators have dealt with an example of unwanted arbitrage. The main part of the paper then deals with legal tools to suppress arbitrage. The main focus is on legislative drafting techniques such as choosing a narrow wording, a broad wording, anti-evasion rules or the concept of abuse. I conclude with a glance at problems of regulatory arbitrage in a corporate setting.

Suggested Citation

  • Langenbucher Katja, 2021. "Regulatory Arbitrage: What’s Law Got To Do With It?," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 11(2), pages 91-117, July.
    • Handle: RePEc:bpj:aelcon:v:11:y:2021:i:2:p:91-117:n:7
    DOI: 10.1515/ael-2019-0054
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    More about this item

    Keywords

    regulatory arbitrage; cash-settled derivatives; transparency directive; CSX corp. v. Children’s inv. fund; legal security;
    All these keywords.

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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