The Bank of England has warned it will escalate its response if standards in private markets deteriorate, as the Financial Conduct Authority reviews the sector's regulatory framework.
BoE's warning on private market standards
Nathanaël Benjamin, the Bank of England's executive director for financial stability strategy and risk, said the central bank is prepared to take further action if industry standards are not maintained. Speaking at an event on Tuesday, he noted that the BoE is watching developments closely.
"We are ready to escalate if we see standards weakening," Benjamin said, according to his prepared remarks. The warning comes as the FCA consults on new rules for private markets, which have grown rapidly in recent years.
FCA review and market growth
The FCA launched a review of private markets in July, seeking to ensure the sector remains competitive while protecting investors. Private markets, including private equity and venture capital, have swelled to around $13 trillion globally, according to industry data.
The BoE's Benjamin stressed that the central bank is not seeking to stifle innovation but wants to avoid a repeat of past crises where lax standards led to systemic problems. "We have seen in other areas what happens when standards slip," he added.
Impact on the sector
The warning has drawn attention from industry participants, who are already grappling with increased regulatory scrutiny. Some fear that tougher rules could curb fundraising and dealmaking, which have already slowed from pandemic-era peaks.
However, Benjamin argued that robust standards are essential for the long-term health of private markets. "A race to the bottom benefits no one," he said. The BoE's stance aligns with global efforts by regulators to tighten oversight of private assets, which have become a significant part of the financial system.
