Indeed, because of this high leverage, risk perception of these prime brokerages deteriorated to a point that their hedge fund clients came to eclectically decide which investment banks they will deal with rather than the other way round! This was because hedge funds leverage was much lower at about 10 to 15 times in comparison.
The proposal led to the establishment earlier this year of the Financial Stability Forum, which I have the honour to chair. Its agenda focuses on increasing the awareness of the inter-relationships between the various aspects of financial stability, promoting the exchange of information and the identification of gaps, and enhancing the efficiency of standard setting.