Private markets have seen exponential growth over the last several years, yet the infrastructure has not kept pace to support it. As public markets plan for full straight-through-processing and same-day settlement, the private markets are still struggling to make the leap from spreadsheets and paper processing.
Recognizing this need for modernization in the private markets, 存 built the Digital Securities Management (DSM) platform, which added to the research and experimentation of Project Whitney. DSM is designed to modernize and digitize the 帖子-trade processing of private markets and is currently nearing the completion of its production phase.
Related: Discover More From the 2022年存论坛
At the 2022年存论坛, Stephen Prosperi, 存 Director Innovation Strategy & 设计, 采访达伦·坎农, 贝莱德董事总经理, Global Alternative Operations; Carine M. Schneider, AST Private Company 解决方案, Inc. President; and W. 卡森麦克莱恩, 存董事总经理, General Counsel's Office about the exciting developments and challenges of the private markets.
正常化独角兽: As valuations climb higher and higher, “独角兽”这个词, coined a decade ago for the uniqueness of a privately held startup with a value of over $1 billion, 不再稀罕了吗. 今年早些时候，这一数字为1,全球有1000家独角兽, and today there are decacorns – and even hectacorns – private companies valued at over $10 billion and $100 billion, 分别.
Diversifying Exposure into 私人市场: As the world’s largest asset manager, Blackrock has billions in private and growth equity investments. Cannon spoke of the huge appetite for private markets exposure that has exploded across platforms and channels and noted the growing trend to diversify exposure into private markets. 仍然, with too many private companies leveraging one-off tools and spreadsheets to manage their cap tables, Schneider spoke about the importance of purpose-built solutions to service this segment of rapidly growing companies. As crowdfunding has become an alternative to fundraising it has raised the complexity of who actually owns a company, resulting in recordkeeping that is manual, 碎片化和不透明.
新兴的监管挑战: While the private markets have seen exponential growth—raising more capital in the past 10 years than the public markets—there is limited regulation, 监督和可见性. The increased attention and importance has drawn the focus of regulators. The SEC recently issued a proposal that would force hedge funds to provide disclosures to guard against conflicts of interest, 下个月, they are expected to raise the limit for investing in start-ups, further restricting pooled investors in private markets.
Balancing Investor Access and Protection: Schneider noted that start-ups are risky, but accessibility to investing in them should be improved as some of the best returns on investment come from growth stage companies. 公众市场, 直接转矩 serves as the primary good control location, bringing improved efficiency to the clearing and settlement of public securities. McLean noted that a common pain point in the private market lifecycle is they don’t have a common good control location, resulting in a challenge for broker/dealers to meet custody requirements and higher costs passed on investors. To help alleviate these challenges, 存 is seeking SEC approval for 直接转矩 (via the DSM platform) to be a good control location, bringing the same efficiencies to private markets as it brings to the public markets.
弥合与DSM的差距: Modernization is needed to sustain and maintain growth in the private markets, particularly platforms with interfaces 灵活的 enough to keep up with the accelerated pace of change. DSM bridges the gap to modernization, 建立在现代, 灵活的, 基于云的平台, employing APIs and providing DLT functionality. 存 continues to drive innovation, developing platforms that are loosely coupled with modern interfaces. As the private markets infrastructure grows and expands, the technology needs to keep up to support private market securities through transparency.