Secondary transactions in pre‑IPO companies have evolved from a niche practice into a central feature of private capital markets, driven by marquee issuers remaining private for longer and by pent‑up investor demand for exposure ahead of any potential public listing. Companies such as SpaceX and OpenAI have attained substantial scale while private, prompting employees and early investors to seek liquidity and encouraging institutional investors, family offices, and accredited individuals to pursue allocations through negotiated transfers. While these markets can provide access, liquidity, and pricing preferences, they are structurally complex and entail legal, operational, and information risks that require disciplined scrutiny.
Why These Markets Have Expanded
Douglas B. Otto
The prolonged private lifecycle of high‑growth companies has shifted much of the value creation that once occurred post‑IPO into the private domain. This fuels both supply and demand for secondary shares: insiders may monetize a portion of holdings for diversification or life events, and outside investors often view secondaries as the only practical channel to participate. The marketplace that has emerged is vibrant yet fragmented, characterized by opaque pricing, limited disclosures, and bespoke documentation that varies widely by issuer and transaction structure.
Intermediaries and Market Infrastructure
Marketplace platforms, including Forge and other private securities venues, connect sellers and accredited or institutional buyers, coordinate company transfer approvals, and frequently route trades through registered broker‑dealer affiliates. They may offer standardized documentation, escrow, KYC/AML, and accreditation checks that add transparency and process discipline. However, platform involvement does not guarantee issuer approval, remove transfer restrictions such as rights of first refusal, or ensure future liquidity. These intermediaries facilitate transactions; however, they do not underwrite risk or assure outcomes.
Chad J. Gottlieb
Broker‑dealers are central to compliant execution. Registered firms are supervised by the SEC and FINRA and are subject to suitability, disclosure, recordkeeping, and supervision requirements. By contrast, “finders” or other unregistered intermediaries who solicit investors or receive transaction‑based compensation without registration present significant legal exposure. Their involvement can jeopardize exemptions relied upon for private placements, invite rescission claims, and trigger enforcement actions. Investors should verify registration and standing, define the intermediary’s role and compensation in writing, and avoid nonstandard payment flows or personal accounts.
Core Legal and Structural Risks
Secondary transactions involve recurring issues that can impair value, delay closing, or fail outright if not managed carefully.
Transfer restrictions and approvals. Most issuers impose strict transfer controls in charters, investor rights agreements, and equity plans. Company consents, rights of first refusal, blackout periods, and repurchase rights can block or unwind transfers. High‑profile issuers often enforce these provisions rigorously, and transfers should not be viewed as complete until all approvals are obtained and legends can be lawfully addressed.
Information asymmetry and MNPI concerns. Unlike public markets, private companies are not obligated to provide regular, audited disclosures. Valuations often reference recent primary rounds that may include preferential terms unavailable to secondary buyers. Sellers may hold material nonpublic information (or MNPI). Trading on MNPI creates securities law risk even where contractual representations are in place.
Title, encumbrances, and settlement mechanics. Employee and early‑investor shares may be subject to vesting, liens, lockups, or company repurchase rights. Confirm ownership, vesting status, absence of liens, and cap table entries. Where forward purchase agreements or other synthetic constructs are used to navigate restrictions, investors assume additional counterparty, documentation, and corporate‑action risks prior to settlement.
SPVs and fee layers. Special purpose vehicles can provide access but add fees, governance complexity, and counterparty risk. Understand the SPV’s terms, control rights, expense leakage, and the issuer’s stance on SPV holders.
Red flags and unregistered brokerage. Investors should exercise heightened caution when encountering pressure to act quickly, limited or vague documentation, unusually high or undisclosed fees, refusal to use a reputable escrow agent, or promises of guaranteed liquidity or imminent IPOs. Equally important is verifying that any intermediary involved in the transaction (whether a broker, finder, or platform) is properly registered and operating within applicable regulatory frameworks. Engaging with unregistered or improperly accredited intermediaries can expose investors to significant legal and financial risk, including invalidated exemptions, rescission rights, and regulatory scrutiny.
Regulatory Framework and Enforcement
U.S. secondary trades do not generally rely on Regulation D for the resale itself. Regulation D is an issuer‑focused safe harbor (most commonly Rule 506 under Section 4(a)(2)) used for primary offerings by the issuer or by a special purpose vehicle (SPV) that is issuing its own interests to investors. In secondary deals that use an SPV, the SPV’s issuance to investors may, if certain requirements are satisfied, proceed under Reg D, but the separate transfer of the issuer’s shares from the selling holder to the SPV (or to the end buyer) must independently satisfy a resale exemption.
Common resale pathways include:
Section 4(a)(1): exempts transactions by “any person other than an issuer, underwriter, or dealer.” The key risk is being deemed an “underwriter” (i.e., participating in a distribution). Where there is no distribution and no underwriter involvement, ordinary resales by non‑affiliates can rely on 4(a)(1).
Section 4(a)(7): a federal resale exemption for private transactions to accredited investors with specified information delivery and other conditions. It is non‑exclusive, preempts state blue sky registration for “covered securities,” and is often used when the buyer base is accredited and the issuer will not or cannot provide public‑style disclosures.
Rule 144A: permits resales to qualified institutional buyers (QIBs) of eligible restricted securities, providing liquidity for institutional secondary trades. 144A resales are often paired with initial acquisitions made in reliance on another exemption.
Regulation S: provides an offshore safe harbor for offers and sales made outside the United States with no directed selling efforts into the United States.
Even compliant resales of restricted securities can implicate federal and state “blue sky” considerations, holding periods, restrictive legends, issuer consent, and transfer agent procedures. Care is required to map the exemption for each part of the transaction (e.g., SPV issuance under Reg D and the separate resale under 4(a)(7), Rule 144A, Regulation S, or 4(a)(1)). Regulators have intensified scrutiny of private market intermediaries, particularly unregistered brokerage, misleading marketing, and failures in information delivery, with potential consequences including fines, rescission, and investor losses.
Best Practices for Investors
Sophisticated investors can mitigate risk through disciplined process and documentation. Confirm that any intermediary is a registered broker‑dealer or that the platform executes through one, and route all funds via reputable escrow under written instructions. Diligence should encompass issuer transfer restrictions, approval pathways, seller title and encumbrances, and any SPV or synthetic structure terms. Incorporate robust representations regarding authority to sell, absence of MNPI, and compliance with issuer agreements, together with appropriate indemnities and, where warranted, holdbacks or conditions precedent for company approvals.
If misconduct is suspected, such as unregistered brokerage, misrepresentation, or failure to deliver, halt funds movement if possible, escalate to the platform’s or broker‑dealer’s compliance team, consult securities counsel promptly to assess rescission or fraud remedies, and consider reporting to regulators such as the SEC or FINRA.
Conclusion
Pre‑IPO secondaries in companies like SpaceX and OpenAI offer compelling access to growth but operate within a complex legal and regulatory framework marked by transfer controls, limited disclosures, and execution risk. Intermediary platforms and registered broker‑dealers can improve transparency and process integrity, yet they do not eliminate issuer‑level constraints or investment risk. Prudent participation that is grounded in diligence, regulatory awareness, careful documentation, and involving skilled legal counsel is essential in this growing segment of the private markets.
Douglas B. Otto and Chad J. Gottlieb are partners at DarrowEverett LLP, where Otto focuses on complex business litigation and Gottlieb leads the firm’s Corporate and Business Transactions practice.
By Lynn Strongin Dodds, Senior Writer, DerivSource
The Dutch pension fund reform, which took effect at the beginning of this year, is expected to change the way pension funds trade derivatives. Demand for long dated interest rate swaps (IRS), those with maturities beyond 30 years, will diminish in favour of shorter maturities of 10 to 20 years.
The overhaul of the Dutch pension system – the largest in the euro zone with almost €1.8 trn of assets under management – will be staggered over a two-year period.
It comprises a shift to defined contribution (DC) system from defined benefit (DB) which is in line with other developed countries with ageing populations and a workforce that no longer stays with one employer.
In terms of the overall transition, Michiel Tukker, senior European rates strategist at ING, estimates that roughly €550bn in assets will move to the new pension system this year, with another approximate €900bn in 2027. However, “we see a non-negligible probability that a material amount of this will be delayed to 2028,” he said.
“Most eyes will be on ABP (civil service and education), the largest fund with over €500bn in investments, accounting for around a third of the sector’s total size,” Tukker said.
The move to a life cycle investing strategy will enable pension funds to invest more in riskier assets and reduce their exposure to long-dated assets, such as longer-dated sovereign bonds and euro IRS which have typically been deployed for hedging.
Analysts estimate that funds may reduce their long-dated bond and swap holdings by €100 bon to €150 bn through 2028. This unwinding involves paying fixed rates on swaps they previously received leading to higher long-term rates and steeper yield curves.
Tukker also notes securities with shorter tenors will become more popular because the new regime gives flexibility to hedge by age cohort. “In effect, funds will choose to reduce the hedges for their younger participants – those with long maturities on their liabilities- while for older participants, funds may actually increase the hedging ratios as these have relatively shorter liabilities,” he said.
The reforms are significant for the eurozone because Dutch pension funds have historically been the most significant buyers of longer-dated euro IRS. While there are a handful of others, market participants have concerns over liquidity over the long term.
It is early days though and the move by 24 Dutch pension funds, including PFZW, the health care and social welfare sector fund, and PMT, a fund for workers in the metals industry and technical sector, has so far failed to trigger significant disruption in the long dated IRS market, according to research from consultancy Sprenkels.
A recent paper from ING Think notes, in the near term, there may be more flattening pressures as speculative positions get challenged, but that as pension flows start materialising, the overall net impact should still be steeper curves.
Andrew Carson is Global Execution and Quantitative Services Lead at Liquidnet.
What was the highlight of 2025?
Andrew Carson
The drastic reduction in average trade sizes is not necessarily a highlight, however it is a growing reality that market structure has veered across many avenues. The sheer dominance of volumes from the market making community, and the manner in which they execute, has broker/dealers working to find the best ways to disintermediate what is the increasing fragmentation of liquidity. With markouts better understood, there is a growing acceptance of interaction with traditional electronic market making as a contra. This liquidity is pervasive in the markets and has evolved into a much more symbiotic relationship with not only broker/dealers, but also in the ATS landscape.
What was the most significant market structure development of 2025?
It took six months for the new SEC regime to get its footing, but the back half of the year is when the personality started to take shape. Runaway fragmentation has been a displeasure for market participants for many years now, and the Commission’s early efforts to gather feedback around the original Order Protection Rule, particularly in a collaborative manner, has been a refreshing change from the prior administration. Look for alterations to the Order Protection Rule as we move into 2026, and continued commentary on how that can alter runaway fragmentation, but also as it impacts a variety of other market structure components– e.g. tick sizes, access fees, locked/crossed markets, fair access, best execution rule, SIP revenue share, etc. The dialogue is exciting and encouraging, and we expect the market structure headlines to continue to be busy.
What industry trends have been prominent but are now fading (or will soon fade)?
As long as indices, mutual funds, ETFs, compliance risk assessments and beyond rely on the Closing Auction, this daily event will always play an integral part of the US’ market structure. However, what once drove newsworthy conversations about how investors and their brokers could best leverage this liquidity event, the Close is no longer the topic du jour. In October, the US Close accounted for just 4.1% of the total market volume, the lowest in nearly four years. While US volumes soared in 2025, other avenues of trading such as off-hours and the TRF have outpaced this end-of-day event. Its significance certainly won’t disappear, but the Close has waned in impact when holistically considering the US market.
What are your expectations for 2026?
We have a Federal Reserve Bank as divided on interest rate direction as we’ve seen in a long time. The jobs market is likely the most closely watched macro component as we go into 2026, particularly with a blowout Q3 GDP now showing the type of growth we haven’t seen in a couple years. Severe cracks in labor will swing pressure on the Bank to move into a reduction cycle, but for now the forecasting for rate cuts into 2026 are relatively muted, and I think we are seeing that in rates, with the 10yr yield up in the face of the most recent FOMC reductions. So much like we moved into 2025, there is an uncertainty that looms. And uncertainty hurts continuous institutional volumes, which in turn hurts liquidity/trading. Spreads have been elevated for 12 months now, depth has been markedly lower, and until the macro-outlook can come better into shape, expect continued tough trading conditions.
Fenergo report shows fines issued by US regulators decreased by 61%.
U.S. enforcement of anti-money laundering rules slowed last year, due to workforce shifts and enforcement capacity constraints, financial compliance software provider Fenergo said in a report.
Globally, penalties tied to anti-money laundering (AML), know-your-customer (KYC), sanctions, and customer due diligence (CDD) rules totaled $3.8 billion in 2025, down from $4.6 billion a year earlier. The U.S. remained the largest enforcement jurisdiction by value, accounting for $1.67 billion in fines.
Digital asset firms faced the largest share of U.S. penalties, representing 43% of fines issued. Banks accounted for 30%.
Sanctions-related enforcement remained a key driver, including a $216 million penalty issued to venture capital firm GVA Capital for violations of Russia- and Ukraine-related sanctions.
The drop in regulatory penalties “is more about capacity and priorities than any softening of expectations,” said Rory Doyle, head of financial crime policy at Fenergo. Doyle indicated those causes are temporary, and financial firms “should continue to anticipate a more active regulatory landscape.”
Stephanie Farrell is Head of Integrated Trading Solutions, North America, at Northern Trust.
Stephanie Farrell
What were the key theme(s) for your business in 2025?
We saw further adoption of outsourced trading arrangements in 2025, extending to support the trade lifecycle through securities execution, trade settlement, and foreign exchange. Investment managers moved beyond cost reduction toward execution quality, leveraging specialist desks, workflow automation, and data analytics to drive transparency and performance. The conversation evolved from “why outsource?” to “how do we optimize performance and governance?”
What was the highlight of 2025?
Northern Trust achieved a major milestone with 115+ outsourced trading clients in 2025, reinforcing confidence in our model. On the Integrated Trading Solutions desk, fixed income scaled rapidly as electronification and dealer connectivity expanded, enabling clients to enter credit and rates markets without rebuilding internal infrastructure.
What surprised you in 2025?
Two developments stood out:
Workflow AI adoption accelerated from pilot projects to daily tools, streamlining market prep and post-trade analytics.
Outsourcing engagement broadened to include multi-asset and complex exposures, requiring coordination across swaps, FX, and hedges while maintaining best-execution controls. Outsourcing is now as much about operating-model enablement as execution capacity.
What are your clients’ pain points and how have they changed from one year ago?
Today, clients demand proof of outcome: consistent execution quality, transparent broker selection, integrated analytics, and audit-ready evidence. They also seek help with cross-asset onboarding—from connectivity to control testing—delivered without manual friction. The shift from price to performance, control, and speed-to-market is the defining change.
Retail and institutional channel assets reach all-time high
January 13, 2026, BOSTON—Professionally managed assets in the U.S. stand at $73.7 trillion, with the retail client channels comprising $36.6 trillion and institutional channel assets totaling $37.1 trillion. These figures mark all-time highs across both segments of the U.S. market, according to Cerulli’s research, The State of U.S. Retail and Institutional Asset Management 2025.
Retail client channel marketshare briefly surpassed institutional channel marketshare in 2020 and 2021, before declining in 2022 amidst a significant equity market pullback. However, after that blip, retail client channels have continued to gain ground and again are nearing 50% marketshare. “A significant drop in assets during the equity market correction of 2022 has led to retail client channel assets posting lower three- and five-year compound annual growth rate (CAGR) figures compared to institutional client channel assets,” says Brendan Powers, director. “A higher year-over-year growth rate in 2024 highlights a return to the long-term 10-year growth rate trends that have favored retail client channels. We expect this to continue as corporate DB plans pursue pension risk transfers and corporate DC plans continue to witness assets roll over into IRAs.”
Asset managers evaluating addressability in either channel should continue to monitor emerging trends with key intermediaries. Outsourced chief investment officers (OCIOs) continue to grow their footprints as intermediaries across most U.S. institutional asset owner channels. Total U.S. OCIO assets now equal $3.3 trillion as of year-end 2024, having tripled in less than a decade. While new client adoption will drive future growth projections, Cerulli also highlights that replacement mandates are becoming part of this maturing industry. Asset managers distributing products through OCIOs need to be aware of these changing dynamics and monitor the potential evolution of OCIO provider relationships.
Likewise, the RIA channels have become increasingly important to many asset managers’ retail distribution strategies. The independent and hybrid channels’ outsized asset growth has been fueled by advisor movement and M&A activity, creating an attractive $5.9 trillion in professionally managed assets. As M&A efforts, fueled by private equity and aggregators, roll on, there are now a handful of mega firms controlling the bulk of the RIA assets.
Additionally, the range of vehicle options being made available by asset managers for both retail and institutional investors continues to expand as asset managers seek to offer more choice to their clients. “For managers seeking to distribute to institutional investors, the demand will typically start with institutional separate accounts but extend to private funds and/or mutual funds for smaller institutions or for asset classes that are operationally challenging for separate accounts,” says Powers. “The CIT vehicle is now table stakes for managers operating within the DC space. For those pursuing distribution in retail client channels, the ETF and SMA are increasingly utilized, while managers also seek to build out a variety of illiquid alternative wrapper options (e.g., private funds, interval funds) to make private market strategies easier for affluent investors to access,” he concludes.
For over 30 years, Cerulli has provided global asset and wealth management firms with unmatched, actionable insights.
Headquartered in Boston, Cerulli Associates is an international research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.
Steve Cavoli is Global Head of Execution Services at Virtu Financial.
Steve Cavoli
What industry trends have been prominent but are now fading (or will soon fade)?
Exchange and ATS proliferation. We’ve likely passed the peak. Growing industry frustration with fragmentation, combined with renewed discussion around possibly scaling back the trade-through prohibition rule (611), signals a shift toward consolidation rather than expansion of new venues.
As the market becomes saturated, we expect a move toward simpler, more efficient matching models. In this environment, we believe that smart execution algorithms will increasingly drive trading decisions and liquidity will flow more directly and bilaterally instead of through an expanding set of anonymous venues.
What surprised you in 2025?
The pace and enthusiasm with which buy-side clients have embraced alternative liquidity sources in 2025 has been striking. Many have moved beyond traditional exchanges and ATSs to pursue more diverse and better-segmented opportunities. Any lingering hesitation around single-dealer platforms has abated as clients recognize the meaningful liquidity available directly from a number of providers.
This shift has accelerated the adoption of IOI-driven liquidity solutions, tailored directly to an algorithm’s objectives, and iterated in ways to benefit clients. Our enhancements through vEQ Link and a roster of the strongest dealers in the market have materially expanded what our execution strategies can deliver.
That said, intelligent access alone isn’t enough. Clients now expect clear transparency that connects algorithmic intent at the child-order level to the actual execution outcomes. Taken together, these capabilities have driven exceptionally strong client adoption and satisfaction.
What are your clients’ pain points and how have these changed over the past year?
We didn’t see fundamentally “new” pain points in 2025—access to liquidity remains the perennial challenge, only more acute as markets have welcomed more venues and become increasingly fragmented. To address this pressure, we’ve helped clients by aggregating single-dealer liquidity from the industry’s largest providers. Doing this well requires three things:
Pre-trade transparency: Access alone isn’t enough; algorithms make better decisions on behalf of clients when available liquidity is reasonably actionable and knowable (through IOIs and other methods).
High-fidelity interaction: Once actionable, through an IOI for example, the algorithm must ingest and respond to the data at speed, processing a firehose of data without the throttling constraints many firms still face.
Post-trade accountability: Upon parent order completion, clients must be able to measure expected versus actual outcomes through robust post-trade analytics.
Market capitalization of companies listed in Asia is about $34 trillion, representing about 27% of global market capitalization, OECD said last year. Broad trends are positive, with some expectation that Asian market capitalization will surpass the Americas by 2040.
Nearer-term, institutional trading and investing firms’ optimism toward the business prospects of APAC capital markets improved in 2025, according to the ASIFMA 2025 Asia-Pacific Capital Markets Survey. More firms said they will increase their presence in APAC markets this year, and no participant intends to exit any market.
Traders Magazine caught up with Alice Pocklington, Executive Vice President, Asia Pacific at Trading Technologies, to learn more about the firm’s recent initiatives and future plans in the region.
Briefly outline your role and responsibilities at Trading Technologies?
Alice Pocklington
I joined TT about three years ago as the head of Asia, where I hold overarching responsibility for operational and commercial success in the region. My primary focus is on defining and executing our regional strategic roadmap to ensure we meet our ambitious growth objectives.
We have a diverse team of 40 people across Singapore, Australia, Hong Kong and Japan, plus a few satellite locations, covering sales, engineering, product, infrastructure, and customer support. The teams work collaboratively to bridge the gap between our global vision and the specific nuances of each local market.
What were 2025 highlights for TT Asia?
We kick off every year globally by running regional internal sessions to make sure everyone is aligned on the vision and strategy. 2025’s regional kick-off theme was ‘Setting Records’, and now looking back at the year, I can certainly say we did that – it was a very successful year.
In Asia, we closed 2025 with a healthy 15% growth in the business. I think we onboarded over 30 new logos, ranging from small five-person shops to large corporates, regional banks and brokers. The relationships and the reputation that we have in the region is a testament to the TT brand, and it’s really positive to see how many organizations want to work with TT.
Volume traded on APAC markets on our platform in 2025 increased by just over 16%, which is a respectable lead on general market growth globally and across parts of the region. But what’s really interesting is that there was a 25% increase in volume traded by our Asia-based users, a large part of which was traded in Europe and the US. Whilst we’ve increased the number of users on the platform, this fits with the narrative we’re seeing in Asia; healthy economic growth, increasing investor sophistication, more education, easier access, and of course the need to diversify and mitigate risk with increasing geopolitical uncertainty.
Earlier in the year we released Pre-Trade Portfolio Risk, and we launched TT Select for ‘protail’ traders, both of which are very relevant to the Asian market place. We also partnered closely with exchanges in the region on the launch of new products and campaigns to collectively drive adoption and growth. We won an impressive six region-specific industry awards, again, setting a new record for APAC, which is really testament to the hard work and success of the entire team at TT, not just here in APAC but globally.
On a more personal note, I’m just really proud of the team. There has been a lot of positive change at TT over the last few years, new business lines, new products to sell and support – and it’s been impressive to watch the team adapt and deliver on everything asked of them.
Trading Technologies attended and participated in the FIA Asia Derivatives Conference in Singapore in early December. What were the main themes for TT and its clients?
FIA Asia is a great conference. As with FIA Boca in the U.S., there are so many people coming in from out of town for the entire week. With so many side events and meetings, it’s great to build on existing relationships and make new ones, but it’s also utterly exhausting at the same time!
Some of the key themes this year were around resiliency and risk management, which was no surprise. There was a lot of talk about geopolitical uncertainty, volatility as the new norm, fragmented liquidity, and capital efficiency pressures. There were interesting discussions around the shift toward predictive risk management – anticipating stress before it happens, how we can manage margin risk more effectively, and the roles of CCPs, regulators, and technology in achieving this.
Of course, AI was discussed at length, across risk detection and also in the context of trading, automation, market surveillance, and just generally enabling organizations to operate more effectively and efficiently in their day-to-day operations. As our very own Chief Product Officer Reena Raichura stated, ‘a successful AI strategy needs a solid data strategy’ – and it was very clear from the conference that data and analytics are becoming the new battleground for competitive advantage. If you get this right, you’re positioning your organization for success.
Reflecting on the content, I feel confident that TT is on the right track to deliver long-term value to our customers. We continue to evolve our multi-asset platform far beyond execution and connectivity with solutions across the entire trade lifecycle. Our deepening focus on data and analytics, coupled with the recent acquisition of Open Gamma for margin optimization, will provide a very relevant and holistic ecosystem for our customers.
What initiatives are planned for 2026?
We have a lot planned. But as I like to maintain, focus wins, particularly in Asia where you can’t be everything to everyone. There’s just too much diversity and too much fragmentation.
I look at three key business objectives. The first is targeted geographic expansion with regional banks and brokers, focusing on our bread-and-butter EOMS and clearing offerings across futures and options, fixed income, and FX. We provide access to local APAC and international liquidity venues and the tools needed to successfully interact with those markets.
Our second objective is to accelerate growth with the buy-side community. Historically we have had very strong sell-side relationships in this part of the world; now we want to expand our footprint with CTAs, commercials, props, and hedge funds. With the addition of our Data & Analytics and Quantitative Trading Solutions offerings, bolstered by the OpenGamma acquisition, we have the product suite in place; now we’re investing in the specialized talent required to cultivate these relationships. .
Our third objective is to better leverage our partner ecosystem, which is vital in a region as vast and diverse as APAC. This network is primarily driven by our relationships with regional venues, where collaboration ranges from joint marketing and educational initiatives to co-selling our core offerings. Many of our partners are also customers, utilizing our platform for distribution and services, and establishing a more structured and focused approach to these alliances will be a big theme for us in 2026.
Global FinTech funding rebounds, rising 21% in 2025 versus 2024 to $53 billion across 5,918 deals, reflecting increased investor confidence
The US remains the leading market with $25.1 billion, while the UK reclaims second place with $3.6 billion, closely followed by India with $3.4 billion.
The recovery points to renewed momentum in global FinTech.
Innovate Finance, the industry body representing UK FinTech, has released its 2025 global FinTech investment report, revealing a strong rebound in funding worldwide. Global FinTech investment reached $53 billion in 2025, up 21% from 2024. The UK retained its second place ranking globally and first in Europe, attracting $3.6 billion, more than the next five European countries combined.
In 2025 global FinTech funding returned to growth, reflecting a stabilising environment after several years of decline. FinTech companies worldwide raised $53 billion across 5,918 deals, demonstrating sustained investor interest amid selective capital deployment.
The United States remained the dominant market, attracting $25.1 billion, followed by the UK ($3.6 billion), India ($3.4 billion), the UAE ($2.5 billion), and Singapore ($2 billion), rounding out the global top five. Brazil, Canada, and Mexico formed a strong mid-tier cluster, each raising between $1.3 and $1.6 billion, highlighting growing adoption of payments, digital banking, and investment platforms across the Americas.
Over the past decade, only the US, UK, India, and Germany have consistently appeared in the global Top 10. While investment concentration has eased, the top ten markets still account for 82% of global FinTech funding in 2025, showing capital is spreading slowly, leading hubs remain dominant, but emerging markets are gaining ground.
Major investment activity worldwide was driven by payments and cryptocurrency platforms. The top five global deals were Binance ($2 billion, UAE), Ramp ($1 billion, US), Kraken ($800 million, US), FNZ ($650 million, UK), and PhonePe ($600 million, India). Investment momentum accelerated in H2, rising 61% compared to H1, pushing total funding 21% above 2024 and near 2023 levels, signalling renewed confidence and early stages of recovery.
European FinTech Investment
Europe raised $8.8 billion across 1,391 deals in 2025, with the UK leading at $3.6 billion with 534 deals – more than the next five European countries combined. France returned to the global top 10 with $1.1 billion from 127 deals, followed by Germany ($1.0 billion from 149 deals), Switzerland ($0.5 billion) and the Netherlands ($0.4 billion).
Ireland, Denmark, Spain, Lithuania, and Italy completed the top ten European investment markets, with funding focused on digital banking, payments, lending, and financial infrastructure. The top 10 European countries accounted for roughly 84% of total European investment. Year-on-year Europe was up 7%, suggesting Europe’s recovery may lag the US (13%) and the rest of the world (46%).
UK FinTech: Steady Performance Amid Global Challenges
In 2025, UK FinTech investment remained largely flat compared to 2024, rising just 0.4%, and remained 37% below 2023 levels, while many global markets recovered. However, the second half of the year saw a notable $1.9 billion raised – an 11% increase on H1 – the first 1st half/2nd half growth in two years, a positive signal for the UK ecosystem.
The UK retained its second place in the global ranking in a close contest with India, attracting $3.6 billion in investment compared to India’s $3.4 billion. Notably, UK funding was spread across 534 deals – more than double India’s 253 – highlighting a broader and more diversified investment landscape in the UK.
Key UK deals included FNZ ($650m, Wealth Management), Rapyd ($300m, Payments), Dojo ($190m, Payments & Merchant Acquiring), Quantexa ($175m, Data Analytics), and Fnality ($136m, Payments). These top deals highlight a resurgence in Payments and B2B infrastructure platforms, which dominated capital raises. Overall, the data points to early signs of an upturn in the UK FinTech sector.
Additionally, secondary market activity remained strong in 2025, highlighted by Revolut’s $3 billion of secondary deals, valuing the company at $75 billion.
Opportunities in the Next Investment Cycle
FinTech investment typically mirrors broader VC trends, which have experienced a cyclical downturn in recent years.
Innovate Finance emphasises the UK’s opportunity to strengthen its position as a destination for capital and talent while improving inclusivity and regulatory competitiveness. Recent government reforms – the Mansion House Accord, PISCES private share trading venues, a National Payments Vision, Smart Data and digital ID legislation, and regulatory streamlining – have laid strong foundations.
Janine Hirt, CEO of Innovate Finance, said:“Our latest investment figures show the resilience, strength, and global competitiveness of our phenomenal UK FinTech ecosystem. Attracting a strong $3.6 billion in investment in 2025 – and again claiming second place globally behind only the United States – the UK has once again proven its credentials as a world-leading financial innovation and technology hub. Other countries are quickly gaining pace however, and so to maintain our global lead it is imperative that we push ahead on delivering key regulatory reforms with speed, increase access to growth capital, and continue to foster an environment which is attractive for both domestic and international entrepreneurs and investors. Our thriving UK FinTech sector is driving growth and productivity across the country, supporting consumers with the cost of living, facilitating greater financial inclusion, and creating thousands of jobs each year. We at Innovate Finance look forward to continuing to work with industry, regulators, and government to cement the UK as the best place in the world to start, build and scale a FinTech business.”
Economic Secretary to the Treasury Lucy Rigby said: “UK fintech continues to show real strength and resilience, with an upsurge in investment in the second half of last year and the UK firmly established as Europe’s leading fintech hub. That momentum gives us confidence going into 2026 and I want to double down on it — backing UK innovators and wealth creators, and ensuring investment flows to the fintechs that will drive this country’s future prosperity.”
Val Wotton, Managing Director and Global Head of Equities Solutions, DTCC.
What were the key theme(s) for your business in 2025?
Val Wotton
With the UK and EU now confirmed to move to T+1 in October 2027, this move highlights the industry’s commitment to reducing risk and improving efficiency. Progress in same-day trade matching – particularly in Europe – demonstrated that firms are embracing post-trade operational best practices and technology modernization. Readiness for T+1 remains a shared responsibility, requiring continued investment in automation and coordination, as the cost of inaction is significantly higher than the cost of action. At DTCC, we’ve seen firsthand how automation and collaboration are key to a successful transition, and are committed to supporting market participants as the UK and EU move towards a T+1 settlement cycle.
At the same time, interest in 24×5 trading gained momentum, with 10% of total equity volume projected to be traded during overnight sessions by 2028, according to a recent report by DTCC and EY. While 24×5 trading will deliver benefits such as the opportunity to react to earnings reports and major news as it breaks as well as improving accessibility for global investors to trade at more convenient times, the move also introduces new challenges – funding, liquidity, operational and resiliency readiness – that demand innovative thinking and cross-industry collaboration. DTCC’s planned expansion of clearing windows in Q2 2026 will help to enable the move to 24×5 trading hours while building flexibility into core processes to support increased trading, liquidity management and risk mitigation in a near-continuous environment.
We believe tokenization will be a key enabler of a new digital asset ecosystem, offering the potential to unlock true 24×7 access and mobility, enhanced liquidity, and new trading modalities while leveraging smart contracts to enforce compliance and automate complex business processes. DTCC subsidiary The Depository Trust Company (DTC) recently received a No-Action Letter from the U.S. Securities and Exchange Commission to offer a new service to tokenize real-world, DTC-custodied assets in a controlled production environment. With this approval we are now advancing tokenization efforts with our clients and the industry, with the aim of bridging today’s markets with tomorrow’s digital ecosystem. The evolution could redefine market access, liquidity, and transparency on a global scale.
Shorter settlement cycles, 24×5 trading and asset tokenization are not isolated initiatives; they are part of a global move to enhance efficiency and mitigate risk while advancing innovation across the financial services industry. Collaboration, across market participant firms, regulators, and key stakeholders – as well as robust infrastructure and post-trade solutions are critical as these initiatives advance and shape the markets of the future.
What are your expectations for 2026?
2026 will be a critical year for Europe’s transition to T+1 settlement. The European Union, Switzerland, Liechtenstein and the UK have all set October 11, 2027, as their go-live date. The 2024 move to T+1 in the US provides insights for a successful transition, but Europe’s fragmented market structure creates unique challenges for market participants. Successful T+1 preparation across the region demands automation. Manual interventions and bottlenecks in post-trade processes need to be addressed to enable same-day trade allocation and confirmation.
2026 will also be a crucial year in readiness for T+1. Firms that invest in straight-through processing, modernized architecture and testing with infrastructure providers will emerge not only as regulatory compliant but will also benefit from the capabilities and efficiencies that automation provides. While preparations should now be well under way, it’s not too late for market participants to ensure readiness for Europe’s move to T+1.
Global markets are also undergoing huge transformations in the front office, with major exchanges actively exploring 24×5 trading. DTCC continues to work closely with exchanges, regulators, and industry partners to ensure a smooth, phased transition to 24×5 trading. These efforts not only address today’s needs but also lay the foundation for a future transition to 24×7 trading as industry infrastructure and regulatory frameworks evolve. While continuous trading rests with the exchanges, DTCC stands ready in 2026 to support overnight trading windows. From Q2 2026, DTCC’s equities clearing subsidiary will increase clearing hours, subject to regulatory review and approval.
With modernization as a top priority across financial services, what does effective transformation look like today?
When financial services firms think about modernization today, many are focused on ensuring we continue to advance a resilient, scalable, and interoperable ecosystem that can adapt to rapid market changes while maintaining trust and stability. Effective transformation goes beyond incremental improvements—it requires new approaches and sometimes new technologies such as APIs, cloud computing, and blockchain to streamline processes, enhance transparency, and reduce risk. These innovations enable greater automation, real-time data exchange, asset tokenization and improved efficiency across the post-trade lifecycle, helping firms meet growing demands for speed and accuracy especially as the industry moves toward capabilities like 24×5 trading.
At the same time, modernization efforts must prioritize operational resilience and cybersecurity to continue to safeguard the integrity of global markets. Collaboration across the industry is also essential to establish common standards for efficient data exchange, technology integration and interoperability between market participants, ensuring that new solutions work seamlessly across participants and jurisdictions. At DTCC, we view modernization and transformation as a continuous journey—balancing innovation with reliability to deliver measurable industry benefits, such as improved settlement efficiency through capabilities like partial settlement. These advancements demonstrate real value by reducing risk, optimizing liquidity, and strengthening market stability as we prepare the financial ecosystem for the future.
Secondary Market Transactions in Pre‑IPO Companies: Opportunities and Investor Risks
By Chad J. Gottlieb and Douglas B. Otto, DarrowEverett LLP
Secondary transactions in pre‑IPO companies have evolved from a niche practice into a central feature of private capital markets, driven by marquee issuers remaining private for longer and by pent‑up investor demand for exposure ahead of any potential public listing. Companies such as SpaceX and OpenAI have attained substantial scale while private, prompting employees and early investors to seek liquidity and encouraging institutional investors, family offices, and accredited individuals to pursue allocations through negotiated transfers. While these markets can provide access, liquidity, and pricing preferences, they are structurally complex and entail legal, operational, and information risks that require disciplined scrutiny.
Why These Markets Have Expanded
The prolonged private lifecycle of high‑growth companies has shifted much of the value creation that once occurred post‑IPO into the private domain. This fuels both supply and demand for secondary shares: insiders may monetize a portion of holdings for diversification or life events, and outside investors often view secondaries as the only practical channel to participate. The marketplace that has emerged is vibrant yet fragmented, characterized by opaque pricing, limited disclosures, and bespoke documentation that varies widely by issuer and transaction structure.
Intermediaries and Market Infrastructure
Marketplace platforms, including Forge and other private securities venues, connect sellers and accredited or institutional buyers, coordinate company transfer approvals, and frequently route trades through registered broker‑dealer affiliates. They may offer standardized documentation, escrow, KYC/AML, and accreditation checks that add transparency and process discipline. However, platform involvement does not guarantee issuer approval, remove transfer restrictions such as rights of first refusal, or ensure future liquidity. These intermediaries facilitate transactions; however, they do not underwrite risk or assure outcomes.
Broker‑dealers are central to compliant execution. Registered firms are supervised by the SEC and FINRA and are subject to suitability, disclosure, recordkeeping, and supervision requirements. By contrast, “finders” or other unregistered intermediaries who solicit investors or receive transaction‑based compensation without registration present significant legal exposure. Their involvement can jeopardize exemptions relied upon for private placements, invite rescission claims, and trigger enforcement actions. Investors should verify registration and standing, define the intermediary’s role and compensation in writing, and avoid nonstandard payment flows or personal accounts.
Core Legal and Structural Risks
Secondary transactions involve recurring issues that can impair value, delay closing, or fail outright if not managed carefully.
Regulatory Framework and Enforcement
U.S. secondary trades do not generally rely on Regulation D for the resale itself. Regulation D is an issuer‑focused safe harbor (most commonly Rule 506 under Section 4(a)(2)) used for primary offerings by the issuer or by a special purpose vehicle (SPV) that is issuing its own interests to investors. In secondary deals that use an SPV, the SPV’s issuance to investors may, if certain requirements are satisfied, proceed under Reg D, but the separate transfer of the issuer’s shares from the selling holder to the SPV (or to the end buyer) must independently satisfy a resale exemption.
Common resale pathways include:
Even compliant resales of restricted securities can implicate federal and state “blue sky” considerations, holding periods, restrictive legends, issuer consent, and transfer agent procedures. Care is required to map the exemption for each part of the transaction (e.g., SPV issuance under Reg D and the separate resale under 4(a)(7), Rule 144A, Regulation S, or 4(a)(1)). Regulators have intensified scrutiny of private market intermediaries, particularly unregistered brokerage, misleading marketing, and failures in information delivery, with potential consequences including fines, rescission, and investor losses.
Best Practices for Investors
Sophisticated investors can mitigate risk through disciplined process and documentation. Confirm that any intermediary is a registered broker‑dealer or that the platform executes through one, and route all funds via reputable escrow under written instructions. Diligence should encompass issuer transfer restrictions, approval pathways, seller title and encumbrances, and any SPV or synthetic structure terms. Incorporate robust representations regarding authority to sell, absence of MNPI, and compliance with issuer agreements, together with appropriate indemnities and, where warranted, holdbacks or conditions precedent for company approvals.
If misconduct is suspected, such as unregistered brokerage, misrepresentation, or failure to deliver, halt funds movement if possible, escalate to the platform’s or broker‑dealer’s compliance team, consult securities counsel promptly to assess rescission or fraud remedies, and consider reporting to regulators such as the SEC or FINRA.
Conclusion
Pre‑IPO secondaries in companies like SpaceX and OpenAI offer compelling access to growth but operate within a complex legal and regulatory framework marked by transfer controls, limited disclosures, and execution risk. Intermediary platforms and registered broker‑dealers can improve transparency and process integrity, yet they do not eliminate issuer‑level constraints or investment risk. Prudent participation that is grounded in diligence, regulatory awareness, careful documentation, and involving skilled legal counsel is essential in this growing segment of the private markets.
Douglas B. Otto and Chad J. Gottlieb are partners at DarrowEverett LLP, where Otto focuses on complex business litigation and Gottlieb leads the firm’s Corporate and Business Transactions practice.