US and UK central banks are stepping up an examination of how banks are exposed to the financial volatility of trading firms. This coordinated effort follows a loss experienced by Jane Street, prompting the Federal Reserve and the Bank of England to increase their scrutiny of bank risk management.

The regulators are intensifying their review of bank risk associated with trading firm counter-parties. The move focuses on the current levels of exposure banks maintain and how those positions are managed in the wake of the losses reported at Jane Street.