BNY Calls for a Complete Overhaul of Private Market Infrastructure
A new BNY Institute paper warns that outdated back-office systems are throttling the rapid expansion of private-capital markets and proposes a four-pillar digital redesign.
Private markets have surged, with semi-liquid funds topping $500 billion and private credit reaching $1.7 trillion, but their growth is constrained by antiquated servicing and settlement infrastructure. The BNY Institute’s new white paper describes how manual handoffs cause settlement delays of up to 30 business days, creating a bottleneck as investors blend private and public holdings in unified portfolios. It proposes a ground-up rebuild built on four pillars: universal persistent identifiers, AI-driven extraction of contract terms into smart contracts, token-enabled delivery-versus-payment settlement, and tokenized collateral that can be efficiently pledged.
The paper stresses that tokenization only adds value if interoperable across custodians, administrators and blockchain networks. It cites ongoing pilots by J.P. Morgan, Apollo, Citibank with Wellington, WisdomTree and DTCC, as well as State Street’s Alpha for Private Markets platform, illustrating industry momentum toward the suggested architecture.
Why it matters
Outdated private-market systems could limit access to fast-growing investment opportunities for both institutions and individuals.
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