Fed's Logan says she's taken note of growth in Treasury basis trade

Feb 10 (Reuters) - Federal Reserve Bank of Dallas President Lorie Logan on Tuesday says she's taken note of the "phenomenal" growth of the so-called basis trade in the Treasury market over the past year, and the potential for market disruption should there be a sharp pullback.

The Treasury basis trade is an arbitrage where hedge funds profit from making highly leveraged bets on small differences between the price of cash bonds and futures. "It does have vulnerabilities if there is a stress event," Logan said at a Futures Industry Association conference in Austin, Texas. "I want to make sure that those in trade have really strong risk management."