Unlocking the Potential of Secondary Trading in Private Markets: A Strategic Transformation for Financial Services.

The private markets landscape is undergoing a seismic transformation. What was once characterized by illiquidity and extended holding periods is now experiencing unprecedented growth in secondary trading activity. Private markets secondaries experienced a surge in 2024, with global transaction volume reaching $162 billion—a 45% increase from 2023 and surpassing the previous record of $132 billion in 2021. This explosive growth represents far more than a cyclical uptick—it signals a fundamental restructuring of how capital flows through private markets.

For financial services executives, this transformation presents a compelling strategic imperative. Secondary trading is emerging as the critical enabler that will unlock trillions of dollars in otherwise illiquid assets. Private markets assets under management are projected to grow to more than $18 trillion by 2033, creating an unprecedented opportunity for institutions that position themselves strategically in the secondary ecosystem.

The investment case is clear: firms that successfully build secondary trading capabilities will capture multiple revenue streams while providing essential liquidity infrastructure for the world’s largest institutional investors. Early movers are already demonstrating the potential, with LP portfolio pricing anticipated to continue climbing, potentially exceeding 90% of NAV in the second half of 2024, levels not seen since 2021. This convergence of technology innovation, regulatory evolution, and market demand creates a once-in-a-generation opportunity to reshape private market infrastructure.

The future belongs to organizations that can seamlessly bridge the gap between private market returns and public market liquidity, turning the traditional illiquidity discount into a sustainable competitive advantage.

The Secondary Trading Revolution: Understanding the Market Dynamics

Market Scale and Growth Trajectory

The secondary trading market for private assets has evolved from a niche segment serving distressed sellers to a sophisticated ecosystem supporting strategic portfolio management. The $87 billion of LP volume in 2024 would represent the 6th largest year on record for the entire Secondary market, demonstrating the segment’s remarkable growth trajectory.

This expansion reflects fundamental shifts in how institutional investors approach private market allocations. Approximately 40 percent of sellers were first-time participants in the market, signaling the increasing significance of secondaries as a portfolio management tool. The broadening participant base indicates that secondary trading is transitioning from an emergency liquidity option to a strategic component of institutional investment frameworks.

The scale of opportunity becomes even more apparent when examining forward-looking projections. Estimates for the 2025 secondary market vary, but consensus across the industry suggests continued growth, with volumes potentially exceeding last year’s levels. Conservative estimates suggest Jefferies expects market volume to surpass $175 billion in 2025, while Lazard’s deal volume estimates range from $180 billion on the low end to as much as $220 billion on the high end.

Driving Forces Behind Market Expansion

The secondary market expansion is driven by multiple converging factors that create sustainable, long-term growth dynamics. The primary catalyst remains the liquidity mismatch between investor needs and traditional private market structures. LPs’ and GPs’ quest for liquidity has been a key driver of volume as exit activity continued to disappoint in most markets.

However, the motivations for secondary transactions have evolved significantly beyond pure liquidity needs. According to a survey by Lazard, 51% of LPs who turned to the secondary market in 2024 did so for portfolio management reasons, while only 33% were motivated purely by their liquidity needs. This shift toward strategic portfolio management represents a fundamental maturation of the secondary market ecosystem.

The supply-demand dynamics continue to favor market growth. According to Evercore, there is approximately $216 billion of dry powder among buyers, and the expectation is that all of it will be used to fund deals in 2025. This substantial capital overhang ensures continued pricing support and transaction volume growth.

Transaction Structure Evolution

The secondary market has developed sophisticated transaction structures that address diverse investor needs and market conditions. The market now comprises two primary segments: LP-led and GP-led transactions, each serving distinct strategic purposes.

LP-led transactions totaled $87 billion, as LPs sought solutions for portfolio management and liquidity amid capital constraints. These transactions enable limited partners to optimize their portfolio exposures, manage cash flow requirements, and implement strategic rebalancing initiatives.

GP-led transactions have emerged as an equally important component of the secondary ecosystem. Continuation vehicles offer the potential for outsized risk-adjusted returns and perform in line with vintage-matched buyout funds with lower downside risk. These structures enable general partners to extend hold periods for high-performing assets while providing liquidity options for existing investors.

The sophistication of transaction structures continues to evolve. Twenty-seven LP transactions greater than $1 billion closed in 2024, a meaningful increase on the 19 such transactions that closed in 2023, indicating the market’s capacity to handle large-scale institutional requirements.

Technology Infrastructure: The Foundation of Secondary Market Growth

Platform Development and Digital Innovation

The secondary trading infrastructure is experiencing rapid technological advancement, with leading platforms implementing sophisticated features to address market inefficiencies. Nasdaq Private Market (NPM) launched the most significant new product in the 10-year history of its company: the next-generation NPM SecondMarket platform, demonstrating the industry’s commitment to technological innovation.

Modern secondary trading platforms are integrating multiple functionalities to create comprehensive ecosystems. SecondMarket is the first platform to offer this breadth of combined services across each segment of the private market ecosystem, including private companies, employees, investors, and intermediaries. This integrated approach reduces friction, improves transparency, and creates network effects that benefit all participants.

The technological capabilities of these platforms extend far beyond simple matching systems. The SecondMarket platform features advanced yet easy-to-navigate trading tools, an intuitive IOI and watchlist submission process, instant portfolio upload functionality, essential and actionable data, real-time negotiations, and powerful, proprietary settlement technology.

Data Transparency and Market Intelligence

One of the most significant technological developments in secondary trading is the emergence of comprehensive data platforms that provide market participants with unprecedented transparency. Tape D Data is a quantum leap forward in bringing transparency and fairness to the private markets, offering private share price estimates, reported trade levels, historic bids and offers, primary round history, 409A valuations, mutual fund marks, cap table analytics, and waterfall analysis.

This level of data transparency addresses one of the fundamental challenges in private market secondary trading: information asymmetry. Traditional private markets suffer from limited price discovery mechanisms, making it difficult for participants to establish fair value benchmarks. Comprehensive data platforms provide the market intelligence necessary for efficient price discovery and risk assessment.

The impact of improved data transparency extends beyond individual transactions to market-wide efficiency improvements. Access to historical transaction data, pricing trends, and market analytics enables participants to make more informed investment decisions and develop sophisticated trading strategies.

Blockchain and Distributed Ledger Applications

Blockchain technology is emerging as a transformative force in secondary trading infrastructure, particularly for private market securities. Technology now exists that digitizes private securities end-to-end, and fully automates the processes involved in settling private markets transactions, even including high friction points such as stamp duty and stock transfer forms.

The application of blockchain technology addresses fundamental inefficiencies in private market settlement processes. Private markets, despite being a huge driver of economic activity, representing an estimated $22.6 trillion in AUM, typically involve paper certificates, a securities register held in an Excel file or other medium not automatically updateable, and therefore require manual human intervention to update the owner in a secondary transaction.

Tokenization of private market securities represents a particularly promising application of blockchain technology. The real revolution will be in private markets, where tokenizing real-world assets such as real estate, private equity, and private debt could improve access to these markets and make trading much more efficient.

The blockchain infrastructure market supporting these applications is experiencing explosive growth. The global blockchain technology market size was estimated at USD 31.28 billion in 2024 and is projected to reach USD 1,431.54 billion by 2030, growing at a CAGR of 90.1% from 2025 to 2030.

Valuation Frameworks: Building Confidence in Secondary Pricing

Net Asset Value Methodologies and Challenges

Valuation represents one of the most critical and complex aspects of secondary trading in private markets. Unlike public securities with continuous price discovery, private assets require sophisticated valuation methodologies to establish fair value benchmarks. Typically, the NAV of a fund is defined as the sum of the fair value (FV) of its assets minus the book value (BV) of its liabilities.

The complexity of private market valuations creates inherent challenges for secondary trading. Without the frequent trading and regular price discovery present in more liquid public markets, firms must estimate private asset values using judgment-based approaches to meet applicable accounting standards. This reliance on subjective valuations introduces potential discrepancies between reported NAV and market-clearing prices.

Secondary market pricing often reflects discounts to reported NAV, but these discounts should not necessarily be interpreted as indications of overvaluation. Secondary market transactions often occur at significant discounts to the reported NAV. These discounts can range from 10% to 30% and are influenced by several factors: Cost of Liquidity for LP Investors: The secondary market is more characterized by opportunistic buyers and forced or distressed sellers than by liquid, orderly buyer-seller transactions.

Regulatory Framework and Standards

The regulatory environment surrounding private market valuations continues to evolve, with increasing emphasis on consistency, transparency, and investor protection. The FCA sets out detailed findings from our multi-firm review of valuation processes for private market assets, highlighting the growing regulatory focus on valuation practices.

Regulatory guidance emphasizes the importance of robust governance frameworks and methodological consistency. Good practice recommendations include: Using multiple valuation methodologies (e.g., discounted cash flow, comparable transactions, yield analysis). Regularly updating and calibrating models based on new market data. Using market-based inputs where possible, such as secondary trading data or peer comparables.

The regulatory evolution reflects the growing importance of private markets in institutional portfolios and the need for investor protection frameworks that match the significance of these allocations. Private markets have grown significantly in recent years, with the UK continuing to be the largest centre for private market asset management in Europe.

Secondary Market Pricing Dynamics

The secondary market for private assets exhibits unique pricing characteristics that reflect the illiquid nature of the underlying investments and the specific motivations of market participants. Pricing in the LP-led secondary market continued to climb in 2024, with average pricing across strategies reaching 89% of funds’ reported net asset values (NAV), according to Jefferies.

Pricing improvements reflect both market maturation and improved liquidity conditions. Average pricing has ticked up by 400bps from 85 percent of Net Asset Value (“NAV”) to 89 percent, indicating that secondary markets are becoming more efficient and that the liquidity discount is gradually compressing.

However, pricing dynamics vary significantly across different asset classes and vintage years. Despite positive pricing action in diversified venture/growth LP-led transactions, the average market price of 75% of NAV still trails that of Buyout portfolios by ~1900 bps (94%). These variations reflect differences in underlying asset quality, market conditions, and investor risk perceptions.

Valuation Enhancement Strategies

Financial services firms are implementing sophisticated strategies to enhance valuation accuracy and market confidence in secondary pricing. Buyers and sellers on the secondary market use NAV as a reference for pricing the stake involved in their transactions, making NAV accuracy critical for market efficiency.

The emergence of specialized valuation service providers is improving market confidence in pricing methodologies. These firms provide independent third-party valuations that reduce conflicts of interest and enhance credibility with both buyers and sellers. The use of multiple valuation approaches and regular mark-to-market updates helps ensure that secondary pricing reflects current market conditions.

Technology is also playing an increasingly important role in valuation enhancement. Advanced analytics, machine learning algorithms, and comprehensive data platforms enable more sophisticated and accurate valuation models. These technological tools help identify comparable transactions, analyze market trends, and implement dynamic pricing adjustments.

Advisory Services: Navigating Complex Transaction Structures

The Role of Secondary Market Intermediaries

The secondary market ecosystem relies heavily on specialized advisory and intermediary services to facilitate complex transactions between institutional investors. Setter Capital is the global leader in liquidity solutions for private fund managers and institutional investors in alternative investments, demonstrating the specialized expertise required for successful secondary market operations.

Intermediaries provide critical value across multiple dimensions of secondary transactions. Two-thirds of last year’s secondaries deal volume was conducted through an intermediary, a 12% rise from the previous year, indicating the growing recognition of the value that specialized advisory services provide in navigating complex transaction structures.

The scope of advisory services extends well beyond simple transaction facilitation. Investment banks and advisory firms, including Jefferies, Evercore, and Lazard, facilitate these transactions by connecting buyers and sellers, providing valuation services, and ensuring compliance with regulatory requirements. This comprehensive service offering addresses the full spectrum of secondary transaction complexities.

Transaction Structuring and Execution

Secondary market transactions require sophisticated structuring capabilities to address the diverse needs of institutional investors and the complex nature of private market assets. Since our inception in 2006, we have completed hundreds of transactions, representing more than $30 billion in liquidity across venture capital, private equity, infrastructure, real estate, real asset, and hedge fund investments.

The complexity of secondary transactions stems from multiple factors, including regulatory requirements, tax considerations, fund documentation, and transfer restrictions. Advisory firms must navigate these complexities while optimizing transaction terms for their clients. The structuring process often involves coordination between multiple parties, including fund managers, limited partners, regulatory authorities, and legal counsel.

Successful transaction execution requires deep market knowledge and extensive relationships across the private markets ecosystem. The process for LP-led secondary deals typically involves: 1. Decision to Sell: LPs opt to sell their fund interests to achieve liquidity or rebalance their portfolios. 2. Engagement of Advisors: Investment banks or advisory firms are retained to manage the sale process and identify potential buyers.

Market Intelligence and Research Capabilities

Advisory firms in the secondary market provide essential market intelligence and research capabilities that enable informed decision-making by institutional investors. This intelligence includes pricing analysis, market trends, fund performance benchmarking, and transaction precedent research.

The quality of market intelligence has improved significantly as the secondary market has matured and transaction volumes have increased. Advisory firms maintain comprehensive databases of transaction history, pricing trends, and market participants that provide valuable insights for structuring and pricing new transactions.

Research capabilities extend beyond historical analysis to include forward-looking market assessments and strategic advisory services. Advisory firms help clients understand market cycles, identify optimal timing for transactions, and develop long-term portfolio strategies that incorporate secondary market opportunities.

Technology Integration and Process Innovation

Leading advisory firms are integrating advanced technology platforms to enhance their service delivery and provide superior client experiences. These platforms include sophisticated data analytics tools, transaction management systems, and client reporting capabilities.

Technology integration enables advisory firms to provide more efficient and transparent services while maintaining the personal relationships that are critical for success in private markets. Digital platforms facilitate document management, due diligence processes, and communication between transaction parties.

Process innovation extends to the development of new transaction structures and market mechanisms that address evolving client needs. Advisory firms are at the forefront of developing innovative solutions such as continuation vehicles, preferred equity structures, and hybrid instruments that provide flexible liquidity options.

Market Opportunities: Sectoral Analysis and Growth Potential

LP-Led Transaction Growth Dynamics

The LP-led segment of the secondary market represents the largest and most established component of secondary trading activity. In 2024, LP-led transaction volume grew by +45% YoY, closing the year at $87bn. LP-led transactions have historically represented more than 50% of the market, and this trend continued in 2024, with LP-led deals accounting for 54% of the market.

The growth in LP-led transactions reflects multiple underlying trends, including portfolio rebalancing needs, liquidity requirements, and strategic asset allocation adjustments. Many of the themes highlighted over the past several quarters remained relevant as the year concluded. On the supply side, many LPs brought forward attractive portfolios to maximize pricing and transaction certainty, including a notable number of first-time LP-led sellers (40%).

The maturation of institutional investor approaches to private markets is driving sustained growth in LP-led activity. Sophisticated institutions increasingly view secondary markets as a strategic tool for portfolio optimization rather than simply an emergency liquidity source. This shift toward proactive portfolio management creates sustainable demand for secondary market services.

GP-Led Market Evolution

The GP-led segment has emerged as one of the most dynamic and innovative components of the secondary market. 48% of total secondary market volume came from three types of transactions totaling approximately $72 billion. These transactions include: Continuation Vehicles (CVs): Transferring assets into a new fund to extend the holding period. Tender Offers: Allowing existing investors to sell their stakes or reinvest under new terms. Preferred Equity Solutions: Offering partial liquidity while retaining exposure to future gains.

GP-led transactions provide general partners with powerful tools for managing fund lifecycles and optimizing returns for their investors. Continuation funds comprised 14% of global sponsor-backed exit volume in H1 2024, up from 11% in 2023, demonstrating the growing acceptance and utilization of these structures.

The innovation in GP-led structures continues to expand, with new transaction types addressing specific market needs and investor preferences. These innovations include partial recapitalizations, growth capital injections, and hybrid structures that combine elements of traditional private equity with secondary market liquidity.

Alternative Asset Class Expansion

Secondary trading is expanding beyond traditional private equity into other alternative asset classes, creating new opportunities for financial services firms. According to Campbell Lutyens, infrastructure secondaries deals accounted for 12 percent of LP-led deals by volume in 2023, nearly triple the levels observed in 2022. The market share held by private credit secondaries, meanwhile, doubled year-on-year to four percent.

The expansion into alternative asset classes reflects both the growth of these segments and the increasing sophistication of secondary market participants. Each asset class presents unique challenges and opportunities for secondary trading, requiring specialized expertise and tailored transaction structures.

Infrastructure secondaries benefit from the long-term, predictable cash flow characteristics of underlying assets, making them attractive to a broad range of investors. Private credit secondaries offer exposure to diversified lending portfolios and can provide attractive yield profiles in various market environments.

Semi-Liquid and Evergreen Structures

The emergence of semi-liquid and evergreen fund structures represents a significant innovation in private market access and secondary trading. Semi-liquid vehicles accounted for nearly one-third of total fundraising in 2024, reshaping how transactions are marketed and transacted upon.

These structures address fundamental challenges in traditional private market investing by providing periodic liquidity options while maintaining the investment flexibility and return potential of private markets. The growth of these vehicles creates new opportunities for secondary market participants and expands the total addressable market for secondary trading services.

The integration of semi-liquid structures with secondary market mechanisms creates hybrid solutions that can address diverse investor needs. These innovations are particularly attractive to institutional investors seeking private market exposure with enhanced liquidity options.

Revenue Models and Business Opportunities for Financial Services Firms

Platform Development and Technology Services

Financial services firms can capture significant revenue opportunities by developing comprehensive secondary trading platforms that serve multiple market participants. In designing the new SecondMarket, NPM drew upon a decade of experience from facilitating over $55 billion in volume for nearly 200,000 eligible private company employees and investors.

Platform development requires substantial upfront investment but can generate multiple revenue streams, including transaction fees, data licensing, advisory services, and technology licensing. Successful platforms create network effects that become increasingly valuable as participant volume grows.

The technology infrastructure opportunity extends beyond trading platforms to include data analytics, portfolio management tools, and regulatory compliance systems. Financial services firms with strong technology capabilities can develop specialized solutions for secondary market participants and license these solutions to other market participants.

Advisory and Intermediation Services

Advisory and intermediation services represent one of the most immediate and scalable opportunities for financial services firms entering the secondary market. A large team of specialists with one focus: secondary advisory. Since 2006, we’ve completed more transactions, gained more market insight, and delivered superior results for clients.

The advisory business model is highly scalable and can generate attractive margins while requiring relatively modest capital investment. Successful advisory practices are built on market expertise, client relationships, and transaction execution capabilities rather than large-scale technology infrastructure.

Revenue opportunities in advisory services include transaction fees, retainer agreements, valuation services, and strategic consulting. The diversity of revenue streams provides stability and growth potential across different market cycles.

Market Making and Principal Trading

Financial services firms with strong balance sheets can capture trading margins by providing market-making services and engaging in principal trading activities. This business model requires significant capital allocation but can generate attractive returns while providing essential liquidity to market participants.

Market making in secondary private markets requires sophisticated risk management capabilities and deep market knowledge. The illiquid nature of private assets creates opportunities for firms that can effectively price and manage inventory risk.

Principal trading strategies can include opportunistic purchases of secondary interests, arbitrage between primary and secondary markets, and structured solutions that address specific client needs. These strategies require specialized expertise but can generate superior returns for firms with the appropriate capabilities.

Data and Analytics Services

The secondary market generates vast amounts of transaction data that can be packaged and monetized as valuable market intelligence. Tape D Data is a quantum leap forward in bringing transparency and fairness to the private markets, demonstrating the market demand for comprehensive data solutions.

Data monetization opportunities include subscription-based market intelligence services, real-time pricing feeds, portfolio analytics tools, and custom research services. The value of data products increases with market participation and transaction volume, creating sustainable competitive advantages.

Financial services firms with access to proprietary transaction data can develop differentiated analytics products that provide superior insights compared to competitors. The combination of transaction data, market intelligence, and analytical capabilities creates powerful moats around data-driven business models.

Risk Management and Regulatory Considerations

Liquidity Risk and Market Volatility

Secondary trading in private markets faces unique liquidity challenges that require sophisticated risk management frameworks. Unlike public markets with continuous trading and price discovery, private market secondaries can experience significant price volatility and limited transaction volumes during stressed market conditions.

Market participants must carefully manage exposure to liquidity risk through diversification strategies, stress testing, and contingency planning. The concentration of secondary trading activity among a relatively small number of large institutional participants creates potential for rapid market movements during periods of stress.

Risk management frameworks must account for the extended settlement periods and complex documentation requirements typical of secondary transactions. These operational complexities can create additional risks that must be identified, measured, and mitigated through appropriate controls and procedures.

Valuation Risk and Mark-to-Market Challenges

The reliance on subjective valuations in private markets creates inherent valuation risks that can impact secondary trading activities. This introduces a risk that firms could inappropriately value private assets, for reasons including insufficient expertise, focus, or poorly managed conflicts of interest, increasing the risk of harm to both investors and market integrity.

Valuation risk management requires robust governance frameworks, independent valuation processes, and regular mark-to-market assessments. Financial services firms must implement controls to ensure that valuation methodologies are consistent, well-documented, and subject to appropriate oversight.

The emergence of secondary market pricing data provides valuable benchmarks for valuation risk management. Firms can use secondary transaction data to validate internal valuations and identify potential discrepancies that require further investigation.

Regulatory Compliance and Reporting

The regulatory environment for secondary trading continues to evolve as regulators adapt to the growth and sophistication of private markets. Robust valuation practices are important for fairness and confidence in private markets, highlighting the regulatory focus on market integrity and investor protection.

Compliance requirements vary significantly across jurisdictions and asset classes, creating complexity for firms operating in multiple markets. Financial services firms must maintain current knowledge of regulatory developments and implement appropriate compliance frameworks to address evolving requirements.

Regulatory reporting requirements for secondary trading activities are becoming increasingly sophisticated, requiring detailed transaction reporting, valuation disclosures, and risk management documentation. Firms must invest in systems and processes to ensure accurate and timely regulatory reporting.

Operational Risk and Settlement Challenges

Secondary trading in private markets involves complex operational processes that create multiple points of potential failure. Settlement of secondary transactions requires coordination between multiple parties, extensive documentation, and compliance with various transfer restrictions and regulatory requirements.

Operational risk management requires robust process controls, technology systems, and business continuity planning. The manual nature of many private market processes creates particular operational risks that must be addressed through appropriate controls and automation where possible.

Settlement challenges in secondary trading include verification of ownership, compliance with transfer restrictions, calculation of purchase prices, and coordination of fund flows. These challenges require specialized expertise and sophisticated operational capabilities to manage effectively.

Technology Adoption Strategies: Implementation Roadmap

Platform Architecture and Integration

Successful implementation of secondary trading technology requires careful consideration of platform architecture and integration requirements. Modern secondary trading platforms must integrate with multiple existing systems, including portfolio management platforms, accounting systems, compliance tools, and market data providers.

Cloud-based architectures provide scalability and flexibility advantages for secondary trading platforms, enabling rapid deployment and cost-effective scaling as transaction volumes grow. The public cloud segment dominated the market in 2024 and accounted for a 61.5% share of the global revenue, reflecting the preference for cloud-based solutions in financial services technology.

Integration requirements extend beyond internal systems to include connectivity with external market participants, data providers, and regulatory reporting systems. APIs and standardized data formats enable efficient integration while maintaining security and compliance requirements.

Data Management and Analytics Capabilities

Effective secondary trading operations require sophisticated data management capabilities to handle the complex and varied data types associated with private market transactions. This includes fund documentation, valuation data, transaction history, market intelligence, and regulatory reporting information.

Analytics capabilities must support both real-time decision-making and longer-term strategic analysis. Real-time analytics enable efficient pricing and risk management during transaction execution, while strategic analytics support portfolio management and market research activities.

Machine learning and artificial intelligence technologies are increasingly being applied to secondary market data to identify patterns, predict trends, and optimize transaction execution. These advanced analytics capabilities can provide competitive advantages in pricing, risk management, and client service.

Blockchain Integration and Digital Assets

Blockchain technology offers significant potential for improving the efficiency and transparency of secondary trading operations. Tokens should be a representation of the security, rather than the security itself. This means the asset moves away from being a bearer instrument to instead becoming a registered instrument, which opens a world of opportunities for the technology.

Implementation of blockchain solutions requires careful consideration of regulatory requirements, technical standards, and interoperability with existing systems. The private nature of many alternative investments creates additional complexity for blockchain implementations compared to public market applications.

Smart contract functionality can automate many aspects of secondary trading, including settlement, compliance checking, and payment processing. However, the complexity of private market transactions may require hybrid approaches that combine automated execution with human oversight for complex decisions.

Security and Compliance Infrastructure

Secondary trading platforms must implement robust security measures to protect sensitive financial data and ensure compliance with regulatory requirements. This includes encryption of data in transit and at rest, access controls, audit trails, and incident response procedures.

Compliance infrastructure must support multiple regulatory regimes and adapt to evolving requirements. Automated compliance checking can reduce operational risk and improve efficiency while ensuring consistent application of regulatory requirements.

Business continuity and disaster recovery planning are critical for secondary trading operations given the time-sensitive nature of many transactions and the potential financial impact of system outages. Redundant systems, backup procedures, and testing protocols ensure operational resilience.

Future Outlook: Emerging Trends and Strategic Implications

Market Evolution and Maturation

The secondary trading market for private assets is expected to continue its rapid evolution as institutional investors increasingly integrate secondary strategies into their investment frameworks. The outlook for private markets is decidedly more optimistic in 2025 than in the past two years, with investors expecting to benefit from increased dealmaking and liquidity.

Market maturation will be characterized by increased standardization of transaction processes, improved pricing transparency, and expanded participant bases. These developments will reduce transaction costs, improve efficiency, and expand the total addressable market for secondary trading services.

The convergence between secondary markets and traditional private market investing will accelerate, with secondary considerations becoming integrated into primary investment decisions. This evolution will create new opportunities for financial services firms that can provide comprehensive private market solutions.

Technology Innovation and Disruption

Technology innovation will continue to drive fundamental changes in secondary trading operations and market structure. Artificial intelligence and machine learning applications will become increasingly sophisticated, enabling automated valuation, risk assessment, and transaction matching.

Blockchain and distributed ledger technologies will mature and achieve broader adoption, particularly for settlement and custody functions. The development of central bank digital currencies and stablecoin infrastructure will facilitate more efficient cross-border transactions and reduce settlement risk.

The emergence of digital-native private market platforms will challenge traditional intermediation models and create new competitive dynamics. Financial services firms must adapt their technology strategies to remain competitive in an increasingly digital marketplace.

Regulatory Development and Global Harmonization

Regulatory frameworks for secondary trading will continue to evolve as regulators adapt to market growth and innovation. Supporting the UK’s status as an international investment hub and fostering growth and innovation is a priority for the FCA, indicating the positive regulatory stance toward market development.

International harmonization of regulatory standards will facilitate cross-border trading and reduce compliance complexity for global financial services firms. Regulatory sandboxes and innovation programs will provide opportunities for testing new technologies and business models.

The development of standardized reporting requirements and market infrastructure regulations will improve market transparency and integrity while creating compliance obligations for market participants.

Alternative Asset Integration

The integration of secondary trading capabilities across different alternative asset classes will create new opportunities and challenges for financial services firms. Each asset class requires specialized expertise and tailored technology solutions while benefiting from shared infrastructure and operational capabilities.

Real estate, infrastructure, private credit, and digital assets will each develop sophisticated secondary markets with unique characteristics and participant needs. Financial services firms that can successfully address multiple asset classes will benefit from diversification and cross-selling opportunities.

The tokenization of alternative assets will accelerate, creating new forms of digital securities that combine the benefits of traditional private markets with the efficiency of digital trading platforms.

Strategic Recommendations and Implementation Framework

Building Secondary Market Capabilities

Financial services firms should develop comprehensive strategies for participating in the secondary trading market that align with their existing capabilities and strategic objectives. This requires careful assessment of market opportunities, competitive positioning, and resource requirements.

Successful secondary market strategies typically focus on specific asset classes, geographic markets, or transaction types where firms can develop sustainable competitive advantages. Specialization enables firms to build deep expertise and strong client relationships while achieving operational efficiency.

Partnership strategies can accelerate market entry and capability development by leveraging the expertise and relationships of established market participants. Strategic partnerships, joint ventures, and acquisition opportunities should be evaluated as alternatives to organic development.

Technology Investment Priorities

Technology investments should be prioritized based on their potential to create competitive advantages and generate sustainable returns. Core infrastructure investments in trading platforms, data management, and analytics capabilities typically provide the highest returns and longest-term value.

Cloud-first technology strategies provide scalability advantages and reduce upfront capital requirements while enabling rapid deployment of new capabilities. Integration with existing technology platforms should be carefully planned to ensure seamless operations and data flow.

Emerging technologies such as artificial intelligence, blockchain, and advanced analytics should be evaluated through pilot programs and proof-of-concept implementations before large-scale deployment. These technologies offer significant potential benefits but require careful risk management and change management.

Talent and Organizational Development

Secondary market success requires specialized expertise in transaction execution, valuation, risk management, and client relationship management. Talent acquisition and development strategies should focus on building these core capabilities while maintaining cultural alignment with the firm’s values.

Organizational structures should be designed to promote collaboration between secondary market teams and other business units while maintaining appropriate independence for conflict management. Clear governance frameworks and reporting relationships ensure effective oversight and risk management.

Training and development programs should address both technical skills and market knowledge while fostering innovation and continuous improvement. Regular assessment of capability gaps and development needs ensures that organizations maintain competitive expertise.

Client Relationship and Business Development

Client relationship strategies should recognize the long-term nature of institutional investor relationships and the importance of trust and expertise in secondary market transactions. Successful client relationships are built on deep market knowledge, transaction execution excellence, and the ability to provide innovative solutions to complex problems.

Business development efforts should focus on institutional investors with significant private market allocations and demonstrated interest in secondary market strategies. This includes pension funds, endowments, insurance companies, sovereign wealth funds, and family offices with substantial alternative investment programs.

Thought leadership and market intelligence sharing can differentiate firms in competitive client situations. Regular market updates, research publications, and educational seminars demonstrate expertise while providing value to current and prospective clients.

Risk Management Framework Implementation

Comprehensive risk management frameworks must address the unique characteristics of secondary trading while integrating with existing firm-wide risk management systems. This includes credit risk, market risk, operational risk, liquidity risk, and regulatory compliance risk.

Risk measurement and monitoring systems should provide real-time visibility into exposures and enable proactive risk management decisions. Stress testing and scenario analysis capabilities help identify potential vulnerabilities and inform risk mitigation strategies.

Regular risk assessment and framework updates ensure that risk management capabilities remain current with market developments and regulatory requirements. Independent risk oversight and validation provide assurance that risk management frameworks operate effectively.

Seizing the Secondary Market Opportunity

The secondary trading market for private assets represents one of the most significant growth opportunities in financial services today. With global transaction volumes reaching record levels and projected to exceed $175 billion to $ 220 billion in 2025, the market demonstrates both scale and momentum that create compelling investment cases for forward-thinking financial services firms.

The convergence of multiple factors—institutional investor demand for liquidity, technological innovation, regulatory evolution, and market maturation—has created a unique window of opportunity for firms that can execute comprehensive secondary market strategies. The success of early movers demonstrates the viability of various business models, from platform development and advisory services to principal trading and data analytics.

However, success in secondary markets requires more than opportunistic participation. The complexity of private asset transactions, the sophisticated requirements of clients, and the evolving regulatory landscape demand specialized expertise, substantial technology investment, and a long-term strategic commitment. Firms that approach secondary markets with inadequate resources or strategic focus risk significant losses and reputational damage.

The strategic imperative is clear: financial services firms must either commit to building world-class secondary market capabilities or risk being marginalized as this critical market segment continues its rapid growth. The institutional investors driving secondary market demand will increasingly partner with firms that demonstrate deep expertise, innovative solutions, and superior execution capabilities.

For firms that make the strategic commitment, the potential rewards are substantial. Secondary markets offer multiple revenue streams, diversification benefits, and exposure to the fastest-growing segment of alternative investments. The firms that successfully build secondary market leadership positions today will benefit from sustainable competitive advantages as the market continues to evolve and expand.

The transformation of private markets from an illiquid asset class to a sophisticated ecosystem with multiple liquidity options represents a fundamental shift in how capital markets operate. Financial services firms that position themselves at the center of this transformation will capture disproportionate value while contributing to the continued evolution of global capital markets.

The opportunity window will not remain open indefinitely. As secondary markets mature and standardize, competitive advantages will become increasingly difficult to establish. The time for strategic action is now for firms willing to commit the resources and expertise necessary to succeed in this dynamic and rapidly growing market.

The future of private markets is not just about holding assets—it’s about trading them smarter, more efficiently, and with greater transparency than ever before. The institutions that embrace this future and build the capabilities to execute it successfully will define the next generation of financial services leadership.