UK Policymakers were Warned about Property Funds Withdrawals

The Bank of England was warned of the possibility that commercial property funds may be suspended because of the rate of withdrawals prompted by the Brexit vote.

Documents released by Threadneedle Street show that policymakers were told in meetings on 28 June and 1 July of the outflows from funds investing in commercial property.

These funds usually offer instant access to cash but as they are invested in properties such as office blocks and warehouses, their assets are hard to sell quickly. Since 4 July, seven funds have taken steps to either stop withdrawals by suspending trading or reducing the fund’s value. Aberdeen Asset Management is cutting the value of its fund by 17%, the largest reduction yet.

The record of the meeting of the financial policy committee (FPC) – established to look for risks in the financial system – shows that the City regulator, the Financial Conduct Authority (FCA), had issued a briefing on commercial property funds.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza