Money for Nothing

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It’s easy to miss The Arbitrager pub in London. Nestled between sandwich shops on the perimeter of Drapers’ Hall, a nineteenth century guildhouse not far from the Bank of England, it’s a small place with a narrow entrance and few seats. But pass by on a summer’s evening and you’ll see brokers, traders and… arbitragers (arbitrageurs?) gather along the ancient alleyway outside to discuss the day’s events, pints perched atop beer barrels. Not as many of them operate in the vicinity as in the pub’s heyday in the 1990s, but The Arbitrager continues to cater to the clientele it’s named for.When it changed hands last year, the pub’s former proprietor bemoaned what a difficult business it is to run: “Pub and bar ownership isn’t for the faint hearted,” he said – it “requires energy and focus.” It’s something his patrons might say about their own business. The difference is that while the hospitality industry faces challenges (as I know well – I’ve described my own experiences of owning a pub here before) the arbitrage industry is on a roll: a “golden age,” the Financial Times characterized it this week.The concept is simple enough. “Arbitrage is when you can do a set of different trades that cancel each other out and make a free profit at the end,” one likely former customer writes in his book, The Trading Game. He was looking at foreign exchange, but the breadth of such trades is currently huge:1Disrupted by the crisis in Iran, the spread between oil prices in different parts of the world has rarely been wider. Last month, a barrel of crude oil could be picked up for $78 in Kansas;…