Regulators Probe Banks' Exposure to Trading Firms Amid $15 Billion Loss

The Bank of England and the US Federal Reserve are investigating global banks' exposure to big trading firms after a series of losses tied to an AI-focused fund called Situational Awareness.

Situational Awareness, run by former OpenAI researcher Leopold Aschenbrenner, reportedly had to dump much of its public-stock portfolio to Citadel Securities, a major market maker, after a sharp slide in AI and chip shares. The scramble led to a reported $15 billion loss at Jane Street, one of the world's biggest trading firms.

The regulators are looking into how banks extend credit to clients as positions and collateral values move during the trading day, known as intraday counterparty exposure.