Aharanov-Bohm Type Arbitrage and Homological Obstructions in Financial Markets

Abstract

We introduce a simplicial and categorical formulation of Aharonov-Bohm (AB) type arbitrage in filtered market systems. Given a filtration modeled as a contravariant functor $F : \mathcal T^{op} \to \mathbf{Prob},$ we consider the associated conditional expectation transport functor $\mathcal E \circ F : \mathcal T^{op} \to \mathbf{Ban},$ and the canonical distortion $dF(i) := (\mathcal E \circ F)(i)(1),$ which measures the failure of constant functions to be preserved under non-measure-preserving transitions. Motivated by the multiplicative transport structure of $dF$, we introduce a simplicial distortion operator defined recursively on the nerve $N_\bullet(\mathcal T)$ of the time category. This construction describes recursively accumulated transported distortions along composable chains of morphisms and leads naturally to a notion of holonomy along loops. We interpret non-trivial holonomy as a global inconsistency invisible at the level of individual transitions, analogous to the Aharonov-Bohm effect in physics. This yields a notion of AB arbitrage, in which arbitrage opportunities arise from global loop effects rather than local price discrepancies. We further introduce simplicial admissibility conditions ensuring that recursively accumulated distortions remain integrable, and show how non-trivial holonomy can be translated into predictable self-financing trading strategies through executable loop dynamics. This establishes a connection between categorical holonomy structures and economically realizable arbitrage. The framework developed here suggests a global and homological perspective on arbitrage theory, in which market inconsistencies are encoded by recursively accumulated simplicial distortions and their holonomy along loops in the underlying time category.