Jane Street suffers record $15 billion loss in July, first negative month since 2016

Jane Street, the New York-based quantitative trading powerhouse, had a very bad July. The firm lost approximately $15 billion in a single month, its largest monthly loss on record and its first negative trading month since 2016. What went wrong The losses trace back to two primary sources: Jane Street’s exposure to Situational Awareness, the AI-focused hedge fund founded by Leopold Aschenbrenner, and a broader set of misguided bets in Asian equity markets. When AI-related equities experienced a severe selloff, the firm found itself on the wrong side of a trade that had, until recently, seemed like a consensus winner. Jane Street had previously invested roughly $2.5 billion in Situational Awareness before the market unwound. Adverse positions in the technology sector compounded the damage. In an internal memo, partner Turner Batty described July as a “bad month” but was quick to note that the firm’s core short-horizon strategies, the bread-and-butter market-making operations that have fueled its ascent, remained profitable throughout the turbulence. The bigger picture is still extraordinary Despite absorbing a $15 billion hit in July, Jane Street’s year-to-date net trading revenues ...