Public and private markets: Evolving asset management Regulation 2025 report

As jurisdictions take action to boost growth and competitiveness, the growth of private assets has moved further up the regulatory agenda.

In this year’s edition of KPMG International’s Evolving Asset Management Regulation report, KPMG professionals look at the growth of private assets and unpack global regulatory priorities to identify new challenges and opportunities for asset managers. There are also developments for managers focused on public markets to contend with.

Revising regulations for private markets

As investors shift greater allocations towards private assets, KPMG’s review of the latest regulatory publications and signals suggests that policymakers are now considering whether existing requirements and guidance remain appropriate for the growing and innovating industry.

Many jurisdictions are refining their approach, in some cases resulting in the introduction of new rules, such as the creation of frameworks for loan-origination funds. However, there are also examples of potentially increased flexibility around the regulation of private assets – these include streamlined fund regimes and delays to incoming reporting requirements.

“Amidst a challenging geopolitical environment, sluggish economic growth and industry demands for simplification, there is a new focus in many jurisdictions on facilitating growth and risk taking – not just introducing ever-more requirements,” says James Suglia, Global Head of Asset Management, KPMG International.

Updated private markets supervisory priorities

The rapid growth of the private markets industry has led to international supervisory focus on several potential risk areas. Indeed, we are seeing a consistent supervisory focus on valuation and conflicts of interest across all asset classes under the private markets banner. And some jurisdictions are examining compliance with rules relating to disclosure and regulatory reporting.

The retailization of private assets

Asset and wealth managers are moving quickly to assess how they can provide retail and high net worth clients with private assets exposure for the first time, with a strong emphasis on finding practical solutions that deliver good client outcomes.

Several regulators have introduced or are considering new fund vehicles that aim to accommodate retail exposure to private assets.

However, as the policy landscape becomes more accommodating in this respect, KPMG’s report finds that fund managers will need to focus on strategic product structuring while addressing key challenges.

Product retailization challenges

Liquidity management: Being able to meet redemption requests without compromising the stability of the fund or harming investors.
Valuation: Requires robust policies, procedures, methodologies and overarching governance, challenge and scrutiny. It is also essential to develop workable solutions to address mismatches in valuation frequencies (e.g. monthly vs quarterly).
Distribution: Appropriately identifying the target market and controls to ensure there is no distribution outside of the target market. And identifying distribution partners in the wider ecosystem that have the capability to bring the product to retail investors.
Conduct risk: Addressing any potential conflicts of interest and ensuring that good customer outcomes are identified and monitored.
Tax: Assessing the impact of tax regulations associated with investors, the fund and the underlying investments.

Focusing on fund risk management

At the same time, across public and private markets, fund risk management continues to be a high priority for regulators, particularly in the context of liquidity management tools (LMTs).

Of particular note are IOSCO’s revised recommendations and implementation guidance on fund liquidity management and the use of LMTs. Despite industry pushback, IOSCO proceeded with its proposals for funds to be categorized as liquid, less liquid, or illiquid based on the liquidity of their underlying assets, resulting in a relatively prescriptive approach.

IOSCO's members will now consider how they will adjust their regulatory frameworks to reflect these updates. In the meantime, some have already moved to introduce new rules or guidance.

Transitioning to T+1 settlement

A successful transition to T+1 securities settlement took place in the US and Canada in May 2024. Some follow-up supervisory work is now expected, including plans by the SEC to evaluate broker-dealers’ compliance with the revised rules, including across the allocation, confirmation and affirmation process.

Next on the horizon is the planned European transition to T+1 and preparations are underway to meet the October 2026 deadline. With many European funds currently settling on a T+3 basis, some fund managers will also need to consider the impact of the shortened securities settlement cycle on their fund unit settlement lifecycle.

Opportunities and risks

Opportunities for asset managers
Risks for asset managers

Product innovation:

Consider how growing your private markets capability can support product diversification (including higher margin products), offsetting fee pressure in public market products and taking advantage of growing private market allocations by asset owners.
Enhanced liquidity risk management:

With the final wave of international fund liquidity-related recommendations announced, consider how you might put in place a future-proof operating model and governance arrangements.
Efficient operating models:

Revise your operating model to efficiently bring together your firm’s public and private markets activities, with a focus on enabling functions such as risk and compliance to have coverage over all relevant risks.

Insufficient capabilities:

Assess what new skills and experience could be required in complex areas of private markets (such as valuation and liquidity management).
Poor outcomes:

Identify and mitigate key risks for retail products, particularly in the context of defining the appropriate target market, the transparency of client disclosures and the robustness of liquidity management arrangements.
Risk and compliance maturity:

Ensure that the risk and compliance function keeps pace with evolving regulatory expectations (for example, around private asset valuation), significant policy developments (such as the transition to T+1) and product evolution (for example, relate to retail private asset exposure).