Regulators on both sides of the Atlantic are pressing global banks for details on their financial links to major trading operations, according to sources familiar with the matter. This follows significant losses incurred by Jane Street after market turmoil tied to the hedge fund Situational Awareness.

The Bank of England and the U.S. Federal Reserve are seeking clarity on the risk appetite of these trading firms, how bank exposure to them shifts during the trading day, and the mechanics of risk controls in place. The inquiries come after a forced deleveraging event that rattled parts of the equity market.

That fund, which focuses on artificial intelligence and is run by former OpenAI researcher Leopold Aschenbrenner, was compelled to liquidate most of its public equities portfolio amid a sharp selloff in tech and AI-related shares. The counterparty for that sale was Citadel Securities, a move that ultimately saddled Jane Street with a $15 billion loss for the month.

Adding to the regulatory pressure, the U.S. Securities and Exchange Commission (SEC) has subpoenaed several major Wall Street banks, including Goldman Sachs, JPMorgan, Citigroup, and Bank of America. The SEC is examining the trading activity and leverage use of Situational Awareness in the period leading up to its near-collapse, with particular focus on the transactions that triggered margin calls and the communication between the fund and its lenders.