Central Banks Scrutinize Bank Exposure After $15 Billion Jane Street Loss

The US Federal Reserve and Bank of England are stepping up their scrutiny of bank exposure to large trading firms after a significant loss at Jane Street, a proprietary trading firm, in July.

The central banks have asked global banks about their exposures to these trading firms, including the risk appetite of the firms and how banks' exposure evolved throughout the trading day.

The inquiry follows turmoil at AI-focused Situational Awareness fund, run by former OpenAI researcher Leopold Aschenbrenner, which was forced to sell most of its public equities portfolio to Citadel Securities in July.

Jane Street lost roughly $15 billion that month, particularly through its investment in the hedge fund and other technology holdings.