Federal Reserve and Bank of England ramp up scrutiny of bank-trading firm ties after Jane Street’s $15B loss

Jane Street, the quantitative trading powerhouse that has quietly become one of the most profitable firms on Wall Street, just had its worst month in a decade. The firm posted a roughly $15 billion trading loss in July 2026, its first month of negative trading revenue since 2016. Now the Federal Reserve and the Bank of England are using the episode as a catalyst to take a harder look at the risks banks face from their deep financial ties to firms like Jane Street. The loss, while jaw-dropping in isolation, didn’t exactly put Jane Street on life support. By mid-August 2026, the firm had still accumulated over $40 billion in net trading revenue year-to-date, already surpassing its full-year 2025 haul of approximately $39.6 billion. What went wrong in July The culprit was concentration risk in a sector Jane Street had been riding hard: artificial intelligence. A significant chunk of the losses stemmed from investments linked to Situational Awareness, an AI-focused hedge fund, along with sizable positions in AI-related equities that got hammered during a broader tech selloff. Memory and semiconductor stocks were hit especially hard, with some corners of the sector declining nearly 50%....