Jane Street’s US$15 billion loss prompts Fed, BoE scrutiny of banks’ trading-firm exposure: FT
Jane Street hit by large losses after exposure to Situational Awareness
The Bank of England and the US Federal Reserve are probing global banks regarding their investments in large trading firms following substantial losses incurred by Jane Street, a US$15 billion hit, according to the Financial Times. The AI-focused hedge fund, managed by former OpenAI researcher Leopold Aschenbrenner, was compelled to liquidate a significant portion of its public equities portfolio in July amid a steep decline in AI and semiconductor stocks.
This precipitated Jane Street's massive loss that month. Central banks are now seeking insights into the risk tolerance of these trading firms, the dynamics of banks' exposure to them throughout the trading day, and the efficacy of their risk management controls, as cited by sources familiar with the situation. Attempts to verify the report with Reuters were unsuccessful.
The Federal Reserve, the Bank of England, and Jane Street have yet to comment on the matter beyond business hours. In August, the US Securities and Exchange Commission subpoenaed major Wall Street banks, including Goldman Sachs, JPMorgan, Citigroup, and Bank of America, to investigate Situational Awareness' trading practices, leverage usage, margin call triggering activities, and communications with lenders.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
