PRESS: Fed, BoE probe bank exposure to trading firms - FT

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The US Federal Reserve and Bank of England have asked global banks for information about their exposure to large trading firms following heavy losses at Jane Street Group LLC in July, the Financial Times reported on Monday.

The central banks are seeking details about trading firms' risk appetite, how banks' exposure to them changed during the trading day and how risk controls operated, the FT reported, citing people familiar with the matter.

The scrutiny follows turmoil at Situational Awareness, an artificial intelligence-focused hedge fund run by former OpenAI researcher Leopold Aschenbrenner. The fund was forced to sell most of its public equities portfolio to Citadel Securities after a sharp sell-off in AI and semiconductor stocks in July.

The US Securities & Exchange Commission last month subpoenaed Wall Street banks including Goldman Sachs Group Inc, JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp as it examined Situational Awareness's trading activity and use of leverage.

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