There is a lot of value in private arbitrage, especially when dealing with emerging markets or countries where the judicial system isn’t well developed. However, a private arbitrage firm ideally needs teeth. One way to get such teeth is to require the parties to post collateral in escrow and agree to surrender this collateral based on the arbiter’s ruling. The cost is that this collateral earns only a small interest. This points to a natural synergy for a bank or broker to offer arbitrage services… each party still gets to choose its investments, but the funds can be frozen at any time.