LONDON: The Bank of England and the U.S. Federal Reserve are asking global banks about their exposures to large trading firms following turmoil at hedge fund Situational Awareness that caused large losses at Jane Street, the Financial Times reported Monday.
The AI-focused fund, run by former OpenAI researcher Leopold Aschenbrenner, was forced to sell most of its public equities portfolio to Citadel Securities after a sharp sell-off in AI and chip stocks. The move contributed to Jane Street taking a $15 billion hit that month.
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, the FT reported, citing people familiar with the matter.
Reuters could not immediately verify the report. The Federal Reserve, the Bank of England and Jane Street did not immediately respond to Reuters requests for comment outside business hours.
Last month, the U.S. Securities and Exchange Commission subpoenaed Wall Street banks, including Goldman Sachs, JPMorgan, Citigroup and Bank of America. The agency is examining Situational Awareness' trading activity and use of leverage following its near-collapse, including the trades that triggered margin calls and the fund's communications with lenders.
