Fund managers have been urged to undertake new know-how, corresponding to blockchain, to enhance pricing of personal belongings.
Inside non-public markets, there are not any standardised, industry-wide valuation strategies for asset managers to observe.
The UK’s Monetary Conduct Authority (FCA) just lately launched its overview into non-public markets valuations which discovered room for enchancment.
The Metropolis watchdog launched the overview final yr on account of issues across the opacity of asset valuations in comparison with public markets, the place belongings are regularly traded and priced.
Myles Milston, co-founder and chief government of personal markets software program supplier Globacap, mentioned the position that know-how can play in supporting improved valuations was “notably absent” from the FCA’s suggestions.
“Digitisation will likely be key to making sure valuations are each correct and auditable,” he mentioned. “New applied sciences are making it doable to embed compliance, worth discovery, and reporting into non-public market workflows, serving to to standardise the valuation course of independently.”
Milston recommended that asset managers take a look at new know-how, corresponding to blockchain-based securities infrastructure, to make sure a extra dependable and clear method to pricing non-public belongings.
Learn extra: Room for enchancment? Particular report on valuations
“Blockchain and distributed ledger know-how supply a solution to embed compliance, worth discovery and reporting straight into non-public market workflows,” he mentioned.
“Utilizing a decentralised and immutable ledger signifies that valuation knowledge could be recorded in a method that’s each clear and auditable, ruling out manipulation or bias.
“Moreover, automated knowledge assortment and AI-driven analytics can improve the accuracy of valuations by aggregating real-time market knowledge and comparable transactions. These improvements might help set up impartial and standardised pricing mechanisms, guaranteeing consistency throughout the {industry}.”