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Prime brokers demand extra collateral as AI-stock rout hits hedge funds
Hedge funds are facing margin calls as a sharp sell-off in AI-related stocks has pushed losses higher across some of the most crowded hedge fund trades, according to a report cited by Hedgeweek.
The Financial Times report says Wall Street prime brokers, including Goldman Sachs and JPMorgan Chase, are demanding additional collateral from hedge fund clients.
The development reflects how rapid declines in AI stocks can quickly translate into tighter financing conditions for hedge funds running leveraged or concentrated strategies, triggering the need to post more margin.
For investors following hedge fund risk, the margin pressure is a direct consequence of market volatility in AI names, which has undermined the trades hedge funds have built around those stocks.