Ant Financial reduces same-day withdrawals from its money market fund to manage liquidity risk

Ant Financial, Alibaba Group’s financial arm, will drastically reduce the amount of money that investors can withdraw each day from its money market fund, in a move it said was taken of its own accord to manage liquidity risk.

From June 6, investors in Ant’s money-market fund Yu’e Bao will be only be able to transfer 10,000 yuan (US$1,577) per day to their bank accounts, down from the 50,000 yuan limit currently. Yu’e Bao is the world’s largest money market fund, accumulating US$266 billion in assets by the end of the first quarter by allowing millions of Alipay users to stash their idle cash in the fund, with no limits on time frame or a requirement for minimum investment.

An Ant spokesperson said that withdrawals from Yu’e Bao to users’ Alipay accounts remain unaffected, at 50,000 yuan daily. Alipay is Ant Financial’s digital wallet service, which allows users to store cash and make online payments.

“The voluntary adjustment was made as part of the Yu’e Bao platform’s ongoing risk management optimisation process, which is designed to better protect the interests of individual investors,” Ant Financial said in a statement.

According to the 2017 annual report from Tianhong Asset Management, manager of the fund, over 99 per cent of users are individual investors, and the average amount each has invested in Yu’e Bao is about 3,300 yuan. This means that a majority of Yu’e Bao’s users will be unaffected by the decrease in same-day withdrawal limits.