@raebroad

When exchanges experience settlement time differences, short-term price divergences emerge. Programmatic arbitrage strategies such as latency arbitrage and cross-exchange market making are triggered first, exploiting mismatches with minimal directional exposure. However, risks include delayed transfers, partial fills, or frozen accounts, especially if one venue cannot settle quickly. In extreme cases, liquidation cascades on the lagging side amplify losses. Risk management requires capital buffers on multiple venues, automated exposure hedges, and stress testing for prolonged settlement delays. The edge exists only until synchronization restores, but risks can outweigh profit.

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