Fund managers have been urged to adopt new technology, such as blockchain, to improve pricing of private assets.
Within private markets, there are no standardised, industry-wide valuation methods for asset managers to follow.
The UK’s Financial Conduct Authority (FCA) recently released its review into private markets valuations which found room for improvement.
The City watchdog launched the review last year due to concerns around the opacity of asset valuations compared to public markets, where assets are frequently traded and priced.
Myles Milston, co-founder and chief executive of private markets software provider Globacap, said the role that technology can play in supporting improved valuations was “notably absent” from the FCA’s recommendations.
“Digitisation will be key to ensuring valuations are both accurate and auditable,” he said. “New technologies are making it possible to embed compliance, price discovery, and reporting into private market workflows, helping to standardise the valuation process independently.”
Milston suggested that asset managers look at new technology, such as blockchain-based securities infrastructure, to ensure a more reliable and transparent approach to pricing private assets.
Read more: Room for improvement? Special report on valuations
“Blockchain and distributed ledger technology offer a way to embed compliance, price discovery and reporting directly into private market workflows,” he said.
“Using a decentralised and immutable ledger means that valuation data can be recorded in a way that is both transparent and auditable, ruling out manipulation or bias.
“Additionally, automated data collection and AI-driven analytics can enhance the accuracy of valuations by aggregating real-time market data and comparable transactions. These innovations can help establish independent and standardised pricing mechanisms, ensuring consistency across the industry.”
