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For example, swaps traded in CME versus LCH are quoted with slight difference? how do we decide the theoretical boundary of the basis ? what factors need to be consider?

I think the principal to decide the basis should be some along the line of: if you were to go and do arbitrage between the two swaps(buy one and sell another), what would be the cost and risk associated with it ? Am I right one this ?

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    $\begingroup$ The difference exists due to initials margin imbalances between the two. Clarusft.com has several articles about this. $\endgroup$
    – AKdemy
    Jul 23 '21 at 5:54
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    $\begingroup$ There’s also a paper by guys from BoE on this topic. I think the Clarus blog is quoting from that paper as well somewhere: bankofengland.co.uk/working-paper/2019/… $\endgroup$ Jul 23 '21 at 16:56

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