US and UK regulators are stepping up their examination of how much banks are exposed to trading firms, according to ft.com. The Federal Reserve and the Bank of England have increased scrutiny of these relationships after a loss at Jane Street, the outlet reports.
The report, published on Monday, links the regulatory move to the Jane Street loss but does not set out the size of that loss or the specific exposure the two central banks are reviewing. The Fed and the BoE have not publicly detailed the scope of their examination, based on the material available.
The scrutiny centers on the ties between banks and the trading firms they serve or fund. Such links can take several forms, and the report does not specify which types of exposure the regulators are focused on. The Fed and the BoE have not issued public statements on the matter in the reporting summarized here.
Jane Street is a trading firm, and the loss referenced by ft.com is the trigger for the heightened regulatory attention rather than the subject of the examination itself. The report does not provide figures for the loss, a timeline, or the names of any banks involved.
What to watch next: whether the Fed and the BoE publish any findings or formal guidance on bank exposure to trading firms, and whether other regulators follow their lead.
