He added that "insufficient arbitrage activity between cash and futures markets can be a destabilizing force in a declining market."

The continued arbitrage activity "also may harm shareholders because it may cause funds to manage their portfolio in a disadvantageous manner," the letter said.

If arbitrage activity is any indication, the Simons' chances look slim.

Furbush (1989) also studied the extent to which arbitrage activity reduces the size of the initial mispricing.

With numbers like these, it is not surprising that so many traditional players have cut back their arbitrage activities to a shoestring operation - contrarians notwithstanding.

Nor is it clear whether A.I.D. regulations address such arbitrage activity.

But it was the timing of arbitrage activities, rather than the aggregate daily level, which had specific impact on the stock market.

Forcing only certain groups to abstain from this arbitrage activity will accomplish nothing.

As a result of this arbitrage activity, hedgers can open and close futures positions at prices better than those they would have otherwise obtained.

Trading was active in a session marked by heavy arbitrage activity involving stocks and stock index futures.