Hedge Fund Leverage Powered by a Few Key Banks Sparks Concerns

The growing dominance of a handful of banks supplying billions of dollars to help juice bets at hedge funds and proprietary trading firms is sparking new financial stability risks, ratings agency S&P Global Inc. warned.

Its latest analysis shows disclosed revenues relating to “markets financing” at four major investment banks — BNP Paribas SA, Barclays Plc, Goldman Sachs Group Inc. and Morgan Stanley — jumped 25% between 2024 and 2025 to more than $24 billion, representing roughly 30% of these firms’ markets business at that time. Such scale and concentration creates a risk to financial stability, the S&P report warned.