Federal Reserve Probes Bank Risks Linked to Major Trading Firms

AI Stock Volatility Prompts Central Banks to Scrutinize Trading Risks

The Federal Reserve and the Bank of England have intensified inquiries directed at global banks regarding the extent of their exposure to major trading firms, amid concerns over risks linked to sharp volatility in artificial intelligence and semiconductor stocks.

This move follows turmoil surrounding the "Situational Awareness" fund—which was forced to liquidate a significant portion of its portfolio—and the US Securities and Exchange Commission (SEC) summoning several major banks to investigate the fund's trading activities and leverage levels.

These developments reflect the growing focus of regulators on the interconnected risks linking banks, trading firms, and hedge funds, particularly during periods of market volatility.