FCA to open review of private markets valuations - reports
The moves comes as regulators have expressed anguish that higher debt financing costs and easy money being withdrawn could lead to a crisis in the private markets.
Citing people familiar with the plans, the FT reported that the financial watchdog will examine asset managers' «disciplines and governance» over valuations.
This would entail investigating who within a company is held accountable for valuations, how information about those assessments is sent to the appropriate management committee and board, and what other governance practices are in place.
The person familiar with the matter told the newspaper that if the FCA determines that governance processes are robust, it can call out failures. If the firm does not respond, the regulator could order it to make improvements.
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This is because valuations are «part of the risk environment» for firms regulated under the FCA, the person added.
A second person with knowledge of the matter told theFT that the review had not yet fully taken shape, while the number and type of asset management firms involved has not yet been determined.
The moves comes as regulators have expressed anguish that higher debt financing costs and easy money being withdrawn could lead to a crisis in the private markets.
Reflected in the large discounts of listed private equity, investors have questioned the credibility of private markets valuations, which lag the public market due to the delay in reporting of asset prices, in light of deteriorating market conditions.
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