On 29 October, Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), made a speech highlighting the importance of private market growth for the UK economy and the investment management sector. Rathi outlined the need for regulatory adaptation to balance innovation and risk, advocating for a cautious, transparent approach to sustain competitiveness.

Key takeaways:

• Growth of Private Markets: Rathi stressed the need for a diverse array of financing options for UK businesses. He pointed to the rapid expansion of private markets as a vital opportunity for UK investment managers, who currently manage more than half of Europe’s private assets.
• Risk and Transparency: Rathi emphasised the importance of transparency in private markets, balancing growth opportunities with risk management, particularly in terms of illiquidity and volatility. He also addressed the question of value and fees, suggesting that an effective assessment of value is needed to ensure that fees align with long-term returns.
• Innovation and Technology: The FCA is exploring tokenization and new fund structures to enhance market accessibility and efficiency.
• Industry Collaboration: In light of recent regulatory reforms, Rathi encouraged investment managers to collaborate with the FCA on evolving standards for disclosure, governance, and valuations to foster a resilient, investor-friendly market environment.

The FCA remains open to industry feedback and collaboration on these initiatives to ensure sustainable growth. For further information please contact Nicholas Smith ([email protected])