The UK’s Financial Conduct Authority has launched a discussion paper looking into illiquid assets and open-ended investment funds.

The move comes just over six months after the UK’s vote to leave the European Union triggered redemptions by investors in open-ended property vehicles, causing liquidity issues and several funds to be ‘gated’ in the days following the June referendum.

Megan Butler, executive director of supervision for investment, wholesale and specialist at the FCA, said: “We want to engage with fund managers and the investors whose money they manage to understand what problems they think exist.”

She said the FCA wants people to consider how well the current rules address those problems in open-ended funds, and what further regulatory intervention might be needed.

The FCA is seeking feedback by 8 May.

John Cartwright, chief executive of the Association of Real Estate Funds (AREF), said the body welcomed the discussion paper.

“The discussion paper is a timely development for the property funds industry and follows on from our own work to maintain a regulatory landscape that works in the best interests of its clients,” he said.

AREF last year commissioned an independent report to assess the impact of the UK’s decision to leave the European Union on the real estate market and evaluate whether any improvements to regulation or fund structures could be made.

The research is due to be published for public consultation in March.

“We will be responding to the discussion paper in due course and we look forward to working with the FCA to identify any areas where ‘best practice’ could be established, either by the industry itself or by the regulator.”

Guy Morrell, manager of HSBC’s Global Property Fund, said: “As we saw in the wake of the Brexit vote, some investors wanted to exit the commercial property sector quickly, but realised that this wasn’t immediately possible.

“I don’t believe that this was an intrinsic problem with property as an asset class, but rather about investors’ expectations around of how quickly they could sell fund holdings in unusual market conditions.”