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HedgeCo.Net \u2014 The Financial Stability Board is preparing to launch a public consultation on how to gather data on hedge funds’ leveraged bets in government bond markets, Bloomberg reported, after early efforts were slowed by inconsistent definitions and restrictions on sharing information across borders. The consultation is expected in the coming weeks, according to people familiar with the discussions.<\/p>\n
The work is being led by the FSB’s Non-Bank Data Task Force, which is chaired by Bank of England Governor Andrew Bailey. A work plan published in July 2025 had targeted a report on data challenges around leveraged sovereign bond strategies by mid-2026. That deadline passed, and the FSB’s consultations typically run for 60 days, which would push the issue into 2027.<\/p>\n
An FSB spokesperson told Bloomberg the work is challenging because of data availability and quality, as well as legal constraints on new data collection and on sharing information across jurisdictions. Regulators are focused on the basis trade, in which funds buy cash government bonds and sell futures, often financed with substantial repo borrowing. The FSB estimated earlier this year that hedge fund cash borrowing in repo markets has reached almost $3 trillion, or about 25% of their assets.<\/p>\n
Authorities’ core concern is visibility. Leverage is frequently built through off-balance-sheet structures in jurisdictions such as the Cayman Islands and spread across several prime brokers, so no single bank or supervisor necessarily sees a fund’s full exposure. A sudden unwind could force sales of sovereign debt at a time of market stress.<\/p>\n
For managers running relative-value fixed income books, the consultation is the start of a process rather than an immediate rule. But the direction is clear: consistent, cross-border leverage metrics would likely feed into future reporting obligations, and firms with large Treasury, gilt and Bund basis positions should expect closer questions from prime brokers and regulators alike.<\/p>\n","protected":false},"excerpt":{"rendered":"
HedgeCo.Net \u2014 The Financial Stability Board is preparing to launch a public consultation on how to gather data on hedge funds’ leveraged bets in government bond markets, Bloomberg \u2026 Continue reading