The Bank of England and US Federal Reserve have intensified scrutiny of global banks' exposure to major trading firms and market makers following significant losses at Jane Street. Regulators are specifically examining relationships with New York-based Jane Street and Ken Griffin's Citadel Securities, alongside firms like Susquehanna and Hudson River Trading. This follows turmoil at AI-focused hedge fund Situational Awareness, led by Leopold Aschenbrenner, which caused multibillion-dollar losses for Jane Street in July.

Despite generating $40bn in net trading revenues by early August, Jane Street's $15bn loss revealed risk-taking beyond typical market-making activities, including equity stakes in businesses like Anthropic. Unlike hedge funds such as Citadel, Millennium, and DE Shaw, these firms manage only founder and employee capital, allowing greater risk freedom. Banks facilitate these firms through prime brokerage, providing leverage and financing that create potential systemic risk.

The BoE's Prudential Regulation Authority and the Fed are assessing risk appetite, intraday exposure changes, and risk controls. Regulators may require banks to hold more high-quality liquid assets if exposures are deemed excessive. The BoE has also probed rapid growth in Asian equities financing by London-based prime brokers, driven by AI stocks like SK Hynix.