Regulation and compliance impede private debt market, say professionals

Regulatory and compliance issues are the most significant barriers to investment in private debt and trade finance, according to research among professionals in the sector.

Some 63% of more than 200 respondents to a Tradeteq survey cited regulation and compliance as a hindrance to the market.

Behind this was ‘technological limitations’, which captured 20% of the vote, and ‘transparency’, with 10%.

Tradeteq, a technology provider that converts private debt and trade finance into tradeable securities, gained views from over 200 finance professionals from the private debt and trade finance arena and found that 86% of respondents believe that trade financing will expand from banks and alternative lenders to be integrated into business-to-business platforms such as logistics and e-commerce.

The research took place against a backdrop of “remarkable growth” in private debt and trade finance assets in recent years. Tradeteq cited figures that predict total assets under management allocated to private debt are expected to hit US$2.3 trillion by the end of 2027, increasing at a faster rate than alternatives overall.

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However, $400 billion of the $1.5 trillion current size of the private debt industry has still not been deployed, said the firm, quoting Apollo Global Management’s ‘Outlook for private markets’ report from October 2023.

Mattia Tomba, head of international markets at Tradeteq, said: “These results should serve as a call to transform access to private debt and trade finance investment, at a time where demand for both is growing rapidly.”

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