https://www.bloomberg.com/news/articles/2023-10-19/us-weighs-leaning-on-banks-to-curb-hedge-fund-leveraged-trading?embedded-checkout=true Bloomberg US Weighs Leaning on Banks to Curb Hedge Fund Leveraged Trading Officials floated bigger haircuts for some secured borrowing Lenders could also have to collect more data on exposures The US Securities and Exchange Commission headquarters in Washington, DC. The US Securities and Exchange Commission headquarters in Washington, DC.Photographer: Andrew Harrer/Bloomberg By Lydia Beyoud and Katanga Johnson October 19, 2023 at 11:15 AM EDT Top US regulators are zeroing in on dangers posed by highly leveraged hedge fund trades, and considering options to rein in risks to the broader financial system. Regulators are especially concerned about the growth of one strategy known as the basis trade, which involves the use of leverage to profit from the price gap between Treasury futures and the underlying cash market. Borrowing in the repurchase market using US Treasuries as collateral has soared in recent years to almost $3 trillion.
Bloomberg
US Weighs Leaning on Banks to Curb Hedge Fund Leveraged Trading
Officials floated bigger haircuts for some secured borrowing
Lenders could also have to collect more data on exposures
The US Securities and Exchange Commission headquarters in Washington, DC. The US Securities and Exchange Commission headquarters in Washington, DC.Photographer: Andrew Harrer/Bloomberg
By Lydia Beyoud and Katanga Johnson October 19, 2023 at 11:15 AM EDT
Top US regulators are zeroing in on dangers posed by highly leveraged hedge fund trades, and considering options to rein in risks to the broader financial system.
Regulators are especially concerned about the growth of one strategy known as the basis trade, which involves the use of leverage to profit from the price gap between Treasury futures and the underlying cash market. Borrowing in the repurchase market using US Treasuries as collateral has soared in recent years to almost $3 trillion.