In this section, we provide you with straightforward and clear definitions of the main technical terms used in the business of ABC arbitrage.
This glossary is a learning tool intended to help you to understand our different activities.
We will update it regularly, particularly in response to your queries.
Alternative investment funds
Funds used in multiple strategies to reduce the level of risk while increasing yield.
This type of management covers a wide series of methods which seek the highest possible performance levels (more independent, in terms of increases or decreases, of the general trend in the financial markets).
AMF - Autorité des Marchés Financiers
AMF is the abbreviation for the Autorité des Marchés Financiers, the French authority that oversees the operations of the Paris stock market and ensures the proper functioning of financial holdings and savings mechanisms through and the compliance to regulations in market operations. The AMF ensures that French market regulations are applied and enforced, in particular in the stock market: listing procedures, market operations and operators, control of financial communication, etc.
Arbitrage is a combination of several operations generating earnings without risk by simply benefiting from imperfections between different financial markets. Arbitrage ensures equal prices at any given moment in time. It ensures fluidity between different markets and contributes by supplying liquidity (cash) to the market. It is a basic operation which guarantees market efficiency.
Arbitrage with market risks
Arbitrage with market risks, unlike arbitrage without market risks, involves certain convergence risks. A typical example is “risk arbitrage“, which involves buying the stock of a company subject to a takeover bid or swap offer and selling the stock of the acquiring company. However, a number of suspensive conditions could cause the deal to fail, such as the requirement for the acquiring company to obtain a minimum percentage of the target for the offer to go ahead. For these strategies, risks are systematically identified and hedged.