Bank of England official on the spot over Woodford fund
A SENIOR Bank of England official was yesterday challenged by MPs over a UK fund that has hit the headlines – and its connections to Guernsey.
Ben Broadbent, deputy governor for monetary policy, was asked about the LF Woodford Equity Income Fund by the House of Commons Treasury select committee.
Dealings in the unit of the fund was suspended last week, with the UK financial services regulator now facing questions over its handling of the case.
The Financial Conduct Authority regulates the LF Woodford Equity Income Fund because it is a UK fund. It does have holdings in several securities listed on the International Stock Exchange, which is based in Guernsey.
Under questioning, Mr Broadbent said: ‘There are some questions as to whether it could or should be able to list some of its securities to meet the regulatory requirements, under which no more than 10% of its assets could be held in unlisted securities, but there were no rules broken so far as I understand it.’
The issue of liquid assets was also raised during the hearing, although the Bank of England official said: ‘I’m not going to answer questions about the individual response of individual regulators. One it is the FCA’s responsibility, but again as I understand it, that was within the rules. So there may be a question about whether investors were sufficiently aware of those rules.’
In a separate development, the operator of the International Stock Exchange issued a statement covering market liquidity.
Mark Nicol, managing director of The International Stock Exchange Authority which is the market operator of TISE, said: ‘The listing rules of The International Stock Exchange Authority demand that all TISE-listed securities must be freely transferable and tradeable. In 2018, on TISE there was a total trading volume of 59m. with a total value of £92m.
‘There are a range of factors which determine the levels of trading in a particular security and, as with any other exchange, certain individual stocks may be illiquid or traded off-exchange.’
He added: ‘The International Stock Exchange Authority will of course communicate with and support any appropriate authority, as and if required.’