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Hedge fund borrowing spree becomes Wall Street's cash cow

Original: How a trillion-dollar hedge fund borrowing spree became Wall Street’s cash cow

A Financial Times report examines how a trillion-dollar borrowing spree by hedge funds has turned into a lucrative source of revenue for Wall Street banks. The story highlights the scale of leveraged trades, largely in the Treasury basis trade, and how prime brokerage lending has become a major profit engine for dealers even as regulators watch leverage risks build up in the financial system.

Why now: Hedge fund leverage is approaching record levels, raising both profit opportunities for banks and concerns about systemic risk.

hedge fundsWall Street banksFinancial Times

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• How a trillion-dollar hedge fund borrowing spree became Wall Street’s cash cow · Financial Times

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