The Federal Reserve’s top banking regulator on Thursday joined a chorus of US officials expressing concern about highly leveraged trading by hedge funds in the Treasury market.
Michael Barr, the Fed’s vice chair for supervision, said the government needed more information about these trades. In the past several months, regulators have been homing in on risks that could stem from 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.
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