FT: Goldman Sachs, JPMorgan demand more collateral from hedge funds as AI sell-off bites; Nasdaq 100 briefly in correction (Oct 9)
What happened
Wall Street's leading prime brokers, including Goldman Sachs and JPMorgan Chase, are demanding additional collateral from hedge fund clients as the sharp sell-off in AI-related stocks drives losses across some of the industry's most crowded trades, the Financial Times reported. Banks have asked funds with concentrated exposure to the hardest-hit sectors to post more collateral to maintain existing borrowing levels, reflecting concern over the speed of the correction and its impact on leveraged strategies. The move follows a broad retreat in AI equities that ended one of the market's strongest rallies of recent years: the Nasdaq 100 briefly entered correction territory this week, falling 10% from its early-June peak, while Sandisk has fallen more than 50% from its high, Intel has lost nearly 40%, and the Philadelphia Semiconductor Index has dropped around 25% since late June.
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Start your free 14-day trialWho’s affected
- GS, JPM (prime-brokerage revenue at risk, but also the enforcers of de-risking); crowded AI trades: MU, AMD, AVGO, MRVL, INTC, ARM, Sandisk (crowded long exposure — forced de-leveraging amplifies drawdowns); Nasdaq 100 / QQQ as the index vehicle
Sources