Several recent episodes including “meme stocks” and Archegos Capital Management clearly show how risky and opaque transactions among non-banks can transmit stress into the financial system, the Federal Reserve said Thursday.
In its twice-yearly report on the stability of the U.S. financial system, the Fed called for greater transparency at hedge funds and other non-banks. “
The Archegos event illustrates the limited visibility into hedge fund exposures and serves as a reminder that available measures of hedge fund leverage may not be capturing important risks,” said Fed Governor Lael Brainard.
“The potential for material distress at hedge funds to affect