International Arbitrage

[dangar]

Hello all,
I would like to know if it is possible to trade shares between markets to take advantage of price disparity and also exchange rates.
I am looking at shares that trade in several exchanges, where i would buy them in one exchange, transfer them to another exchange and sell them for a profit.
The aim is to eventually work it up to a point where i say buy Australian shares, transfer them to the NYSE, sell them, buy some shares there and transfer them back, to Australia, so i am getting a benefit whenever there is a transfer of funds.
Is there a single platform that will allow me to do this? in the past i have tried to open a US bank account and trading account, only to be told i would need to visit a branch. (they even offered to tell me where the closest one would be) would i need to set up bank and trading accounts in other countries.
Any advice is appreciated.
thanks

 

[skyQuake]

Hello all,
I would like to know if it is possible to trade shares between markets to take advantage of price disparity and also exchange rates.
I am looking at shares that trade in several exchanges, where i would buy them in one exchange, transfer them to another exchange and sell them for a profit.
The aim is to eventually work it up to a point where i say buy Australian shares, transfer them to the NYSE, sell them, buy some shares there and transfer them back, to Australia, so i am getting a benefit whenever there is a transfer of funds.
Is there a single platform that will allow me to do this? in the past i have tried to open a US bank account and trading account, only to be told i would need to visit a branch. (they even offered to tell me where the closest one would be) would i need to set up bank and trading accounts in other countries.
Any advice is appreciated.
thanks

How are you going to do the transfer/conversion? Anything particular you're looking at?
Keep in mind some stocks arent convertable - BHP AU to BLT LN
And some of the US stuff are 2:1 ratio etc.

 

[wayneL]

I strongly doubt there would be such arb opportunities available to the retail trader.

It's risk free money and the instos would be all over it in milliseconds, closing the arb PDQ.

 

[skc]

How exactly do you transfer that to another exchange? How long does the transfer take? A few days between transfer and price could have moved against you compared to what razor thin margins you might have to start with.

Also, there is no time overlap in the openning hours between ASX and NYSE. You will be subjected to risk in market gaps. You can however do ASX with HK or Singapore, or US with UK / TSX if you can get access to the stocks.

 

[dangar]

How are you going to do the transfer/conversion? Anything particular you're looking at?
Keep in mind some stocks arent convertable - BHP AU to BLT LN
And some of the US stuff are 2:1 ratio etc.

I am not sure of the transfer conversion details, one of the things i am trying to fin out. also i am aware of the differences in ratios, but if this could be overcome via a transfer between exchanges then i could still work out price differences based on the ratios and exchange rates.

i cant see why it wouldn't be available, as one fpo share in an aus company should not be different to a fpo offered on the NYSE (or equivalent ratios) just traded in a different marketplace.

 

[dangar]

How exactly do you transfer that to another exchange? How long does the transfer take? A few days between transfer and price could have moved against you compared to what razor thin margins you might have to start with.

Also, there is no time overlap in the openning hours between ASX and NYSE. You will be subjected to risk in market gaps. You can however do ASX with HK or Singapore, or US with UK / TSX if you can get access to the stocks.

i am not sure that is what i am trying to find out.
obviously share prices are affected by peoples perceptions, and what markets think the value of the shares are, if a foreign exchange places a higher or lower value on a share, then i would like to be able to take advantage of that.

 

[skyQuake]

i am not sure that is what i am trying to find out.
obviously share prices are affected by peoples perceptions, and what markets think the value of the shares are, if a foreign exchange places a higher or lower value on a share, then i would like to be able to take advantage of that.

The instant arbs that wayneL describes are closely watched by algobots/instos, so no dice there.

Anything that is persistently over/undervalued but don't share timeframes will get manually arbed by the same people behind the aforementioned algobots.

Conversion and fx will be major issues.

 

[skc]

i am not sure that is what i am trying to find out.
obviously share prices are affected by peoples perceptions, and what markets think the value of the shares are, if a foreign exchange places a higher or lower value on a share, then i would like to be able to take advantage of that.

What you want with arbitrage is to buy the stock that is relatively cheap and sell that is relatively high - preferrably at the same time. You then hope that the prices will "eventually" converge so you can closed the positions and make some profit.

There are some opportunities available in these between UK/US and US/TSX. But it really isn't fun staying up all night just to pinch a feel pennies.

It seems like what you are suggesting is that, you only want to buy on the cheap exchange, wait 10 business days (or however long) to transfer the stock to the more expensive exchange and then sell it there at a higher price. That's not exactly arbitrage - that's just an import/export business for shares! No different to someone selling mobile phone battaries on eBay by sourcing them in China. However, with your approach, you will be exposed to risks (in share price and currency movements) that don't justify the reward.