Forex
Central Banks Probe Bank Exposure After $15 Billion Jane Street Loss
The UK's Bank of England and the US Federal Reserve are investigating bank exposure to large trading firms after a recent market turbulence.
In July, Jane Street lost approximately $15 billion due to its investment in Situational Awareness, an AI-focused hedge fund that nearly collapsed. The firm was forced to sell most of its public equities portfolio to Citadel during the sharp selloff in AI and chip stocks.
The central banks are seeking information on the trading firms' risk appetite, how banks' exposure to them evolved throughout the trading day, and how risk controls operated.