BoE and Fed examine bank exposure after Jane Street loss
Jane Street lost roughly US$15 billion in July, particularly through its investment in the Situational Awareness hedge fund and other technology holdings.
The US Federal Reserve and Bank of England are probing banks' exposure to large trading firms following substantial losses sustained by hedge fund Situational Awareness in July. The AI-focused fund, managed by former OpenAI researcher Leopold Aschenbrenner, had to liquidate most of its public equities portfolio to avoid bankruptcy after a sharp decline in AI and chip stocks.
Jane Street's losses amounted to approximately $15 billion. The central banks are requesting details on the trading firms' risk tolerance, the progression of banks' exposure throughout the trading day, and the functioning of risk controls. This investigation follows a recent subpoena issued by the US Securities and Exchange Commission, which is examining Situational Awareness' trading activities and leverage usage in light of the fund's near-collapse. Goldman Sachs, JPMorgan, Citigroup, and Bank of America are among the banks under scrutiny.
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- BoE and Fed examine bank exposure after Jane Street loss freemalaysiatoday.com
