#USA #Washington #SEC #Investment Company Institute #Co-Investment

ICI Advocates for Retail Access in Private Markets

On March 4, 2025, the Investment Company Institute (ICI) made a pivotal move by communicating with the Securities and Exchange Commission (SEC) with a call to action: approve a new principles-based co-investment framework. This initiative aims to enhance the accessibility of private market investments for retail investors, a step deemed crucial by ICI to ensure that average Americans have equitable access to financial opportunities traditionally reserved for institutional investors.

A Modern Approach to Investment

In his statement, ICI President and CEO Eric Pan expressed the significance of this framework. He emphasized that the approval could help streamline the process for retail investment products, ultimately fostering inclusivity in private market participation. According to Pan, "This relief would represent an important leap towards widening retail access to private market investment opportunities while preserving the core protections of the Investment Company Act."

Another essential aspect is the alignment of this initiative with prior discussions between ICI and SEC staff regarding co-investment strategies. The organization anticipates continued collaboration with the SEC in this crucial area, ensuring that the interests of retail investors are prioritized in regulatory updates.

Understanding the Market Dynamics

The impetus for ICI's advocacy stems from a noticeable slowdown in the U.S. initial public offering (IPO) market, alongside a burgeoning private market. As public offerings dwindle, the potential benefits of private market investments grow, highlighting the barriers that retail investors face when seeking to participate.

Current regulations create significant complexities that limit these investors' opportunities to benefit from gains outside public markets. By endorsing changes to the co-investment framework, ICI hopes to mitigate such obstacles, thus empowering investors to capitalize on the potential of private investments.

The Need for Co-Investment Framework

ICI’s push for the SEC to support co-investment exemptive relief, particularly for applications like that filed by FS Credit Opportunities Corp, reflects the pressing need for a revised regulatory landscape. Managers of regulated funds investing in privately placed assets find it increasingly vital to have flexible frameworks that allow seamless co-investment opportunities. However, the rigidity of the current co-investment framework has become obsolete and stifles innovation within the investment process.

Should the SEC grant approval for the FS application, it would significantly broaden the strategic options available for managers, allowing for a more dynamic approach to investment in privately placed assets. ICI advocates that if the SEC streamlines these processes, similar relief should be extended to all funds currently relying on the existing framework. This profound change could act as a catalyst, fostering greater participation from retail investors in private market opportunities.

Conclusion

In conclusion, the ICI's call for a principles-based co-investment framework is not merely about regulatory changes; it encompasses a broader vision of financial inclusivity. By facilitating retail access to private markets, the SEC holds the potential to revolutionize investment landscapes, thus enabling millions of everyday Americans to engage in wealth-building opportunities that were previously out of reach. The ICI continues to pave the way, ensuring that as the investment landscape evolves, so too does the regulatory framework governing it.