BoE and Fed Heighten Scrutiny on Bank Exposure to Trading Firms Amid Market Turmoil

The Bank of England and the US Federal Reserve are increasing their scrutiny of bank exposures to large trading firms following turmoil at AI-focused hedge fund Situational Awareness, which caused significant losses at Jane Street.

According to a report by the Financial Times, people familiar with the matter confirmed that the central banks have stepped up their monitoring of bank relationships with these trading firms.

The move comes after Situational Awareness experienced large losses, affecting its counterparties including Jane Street, which reported losses due to the turmoil at the hedge fund.