European banks lagged U.S. and Japanese banks in arbitrage trading competition

Evidence

Although LTCM was active in the American and Japanese markets, it had particularly heavy involvement in European markets. In the 1990s, financial deregulation in Europe proceeded apace, but arbitrageurs such as LTCM initially found much less competition than in the United States or Japan. “The Japanese banks,” according to Costas Kaplanis (who in 1998 was Salomon Brothers’ head of global arbitrage), “were the ones who were terribly interested in setting up proprietary [trading] desks. The European banks were still a bit hesitant.” — Donald MacKenzie, An Engine, Not a Camera, 986