Is financial arbitrage broken?

Quick Summary:

If a levered player sought to profit from the elevated S&P 500 financing spread (e.g., buying the stocks in the index or a related ETF and selling the futures), it would first need to borrow from a dealer to finance the long leg.

In the case of the S&P 500 futures premium to the underlying cash market, that also seems to mostly reflect ravenous demand.

The chart shows how the implied cost of financing an investment in S&P 500 futures climbed to egregious highs last year, and remains extremely elevated at the moment.

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Article Details

Author / Journalist: Robin Wigglesworth

Category: MarketsFinanceInvesting

Markets: United StatesMaliTaiwan

Topics: Balance Other Chart Tsmc’s Loop Shares Financial Futures Sheet Market

Source Website Secure: Yes (HTTPS)

News Sentiment: Neutral

Fact Checked: Legitimate

Article Type: News Report

Published On: 2025-03-25 @ 06:30:56 (4 days ago)

News Timezone: GMT -5:00

News Source URL: ft.com

Language: English

Article Length: 1679 words

Reading Time: 10 minutes read

Sentences: 76 lines

Sentence Length: 23 words per sentence (average)

Platforms: Desktop Web, Mobile Web, iOS App, Android App

Copyright Owner: © Financial Times

News ID: 27310298

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