Private Markets Face Heightened Pressure for More Transparency

The pressure continues for private markets to increase transparency for investors.

About the proposal

A proposal for the SEC requests private funds to conduct annual audits, distribute quarterly statements, and provide other disclosures for investors.

As the stock market continues declining and facing extensive volatility, pension plans are increasingly allocating more to private funds. Hence, the push for updated regulations from private funds.

Source: Unsplash

“University endowments, insurance funds and retirement funds serving teachers and firefighters are urging the Securities and Exchange Commission to move forward with a proposed rule that would ensure private fund investors receive annual audits and quarterly statements,” according to The Wall Street Journal.

Private equity gaining traction

But pensions aren’t the only ones putting more into private markets these days. Wealthy individuals are turning to private equity as well. 

According to recent data from Boston Consulting Group and iCapital, high-net-worth (HNW) individuals may be racing faster to private equity than institutions. A new report shows that by 2025, the HNW are expected to rack up a compound annual growth rate of 19% and hold more than 10% of capital raised by private equity firms. 

The need for structured data in private markets

But increased transparency isn’t the only problem at hand. The need for structured data within private markets is evident as well.

In fact, according to WSJ, an investment chief of a major US pension plan reports it takes nearly six months to extract and standardize information from private-fund managers’ reports to compare and track costs… 

We do it automatically.

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