FCA actively monitors risks of private markets to financial stability

Joint working group with FSB and Iosco

The Financial Conduct Authority is monitoring the build-up of leverage in private markets as part of its joint evaluation with international regulators of the risks the non-bank sector could bring to financial stability.

During the financial regulator's annual public meeting on Wednesday (4 October), CEO Nikhil Rathi said risks may begin to crystallise in private markets following the shift from a period of low interest rates to a ‘higher rates for longer' macroeconomic environment.  "At some point, you might expect that risk will crystallise in valuations of assets. Those valuations of assets could be assets such as commercial real estate, and we know what is happening in China," he said.  Rathi also noted the watchdog has observed the rapid growth of the private markets, as well as the use of levera...