TREE NEWS reports: The Bank for International Settlements warned that central banks and investors must address growing vulnerabilities as rising leverage across multiple markets threatens to amplify ordinary market swings, pointing to the near-collapse of the Situational Awareness fund in July as a cautionary case. BIS financial stability policy head Gaston Gelos said hedge funds now sit “at the core of core markets,” creating fragility dependent on high leverage and liquidity that can vanish quickly. BIS economics head Frank Smets said market stress has not yet materialized but the risk should not be dismissed.
BIS Warns Over Rising Leverage, Cites Near-Collapse of Situational Awareness Fund
The BIS is framing leverage not as a hedge-fund problem but as a structural feature of the markets where everyone else prices risk, which is why a single fund's near-collapse reads as a system signal rather than an isolated blow-up. The emphasis on liquidity that can vanish quickly matters most for anyone relying on continuous trading in stressed conditions, including RWA issuers and venues that assume secondary markets hold. Whether that warning changes behaviour before stress materialises, rather than after, is the open question worth watching.
Generated by AI for reference only.
Share on WeChat
Open WeChat → Scan → then tap "…" to send to a chat or Moments.
Tap "…" in the top-right corner to send to a chat or share to Moments.