DTCC Director Warns Private Market Operations Need Shared Infrastructure

An executive at the Depository Trust and Clearing Corporation ("DTCC") urged the private market industry to move away from fragmented, manual operational processes and build a shared infrastructure to ensure predictable and reliable outcomes for end investors.

On a DTCC "Private Markets" podcast, Managing Director and Head of Wealth & Investment Solutions Talia Klein asserted that private markets are currently facing a breaking point similar to the public market paperwork crisis of the 1960s. She argued that "instead of lost paper certificates, the risk shows up as fragmented sub docs, capital calls managed in spreadsheets, and manual wiring instructions scattered across inboxes." Ms. Klein must build a shared infrastructure which respects the fundamental differences between public and private markets. She highlighted that private shares involve unique legal documentation, liquidity expectations, and governance structures. She warned that simply copying and pasting public market workflows onto private assets ignores the inherent purpose of private funds.

Ms. Klein emphasized that pragmatic standardization is the key to unlocking scale in private markets. She suggested that the industry should not try to make every feature uniform, but rather focus on standardizing processes that do not create alpha, such as capital calls and onboarding. By doing so, the market could reduce the massive operational costs that currently lock millions of investors out of the asset class, she said.