The World Federation of Exchanges calls for greater oversight as private market growth accelerates

The World Federation of Exchanges calls for greater oversight as private market growth accelerates

London, 1^st July – The World Federation of Exchanges (WFE), the global industry association for exchanges and central counterparties (CCPs), has called for enhanced oversight and policy coordination as private investment markets balloon.

Traditionally a complement to public capital markets, private markets have expanded rapidly, aided by policy incentives, raising critical questions about how this unchecked growth could pose significant risks to market integrity, retail investors and potentially even financial stability. In a new paper, Strengthening Private Markets, the WFE calls for improved data and supervisory scrutiny, more global policy focus, and a fairer balance of incentives between public and private markets.

The key risks of unsupervised growth of private markets are identified in the paper:

• Systemic risk: Increased leverage, opaque valuations, and the bundling of private credit with equity introduce complex risks. These need closer scrutiny to avoid destabilising impacts on the wider financial system.
• Risk to retail investors: Disclosures must be strengthened, and risks clearly communicated. High fees and illiquidity pose additional concerns for non-professional investors.
• Unmonitored secondary trading: The emergence of new trading platforms for private assets could affect public market pricing and integrity. There must be supervisory reporting of such trades and potential disclosure to the public.

To meet these challenges, the WFE recommends policy co-ordination that will:

• Develop harmonised transparency standards across public and private markets.
• Review regulatory and tax treatment regimes, that currently favour private capital.
• Assess the systemic risks associated with the combination of leverage and illiquid secondary trading.
• Promote public listings by ensuring a level playing field and reducing unnecessary burdens.

Nandini Sukumar, CEO of the WFE, said, “Public markets remain the critical infrastructure that underpin capital markets – they are the gold standard, providing liquidity, authoritative pricing, equal access, regulatory oversight and system-wide confidence. Private markets have their place in the ecosystem. However, they need public markets. Ensuring private markets develop without undermining these benefits is the vital policy objective here. As private assets proliferate and begin to target retail investors, policymakers must ensure that transparency, risk management, and investor protection standards keep pace.  Private must evolve within a framework that supports stability, fairness, and long-term economic growth.”

Richard Metcalfe, Head of Regulatory Affairs at the WFE, said, “Transparency, effective oversight, and informed regulation are not constraints - they are prerequisites for sustainable growth. Some national regulators, such as the UK’s FCA, France’s AMF, Singapore’s MAS, and Australia’s ASIC, are starting to look more closely at how to bring more accountability to private markets, and valuable work has been done by the international standard setters at IOSCO, but the rapid growth of private markets means that efforts must be redoubled.”

Read the full paper here.

For more information, please contact:

Cally Billimore                                             +44 7391 204 007

Communications Manager                      [email protected]

 

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges, together with other exchanges feeding into our database, are home to over 49,054 listed companies, and the market capitalisation of these entities is $116.58 trillion; around $155 trillion (EOB) in trading annually passes through WFE members (at end 2024).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

X: @TheWFE

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