SEC plans to open private markets to retail investors and overhaul fee rules

The U.S. Securities and Exchange Commission is preparing a proposal that could open private markets to a broader swathe of retail investors while also revamping a fee rule that has long shaped how money managers are paid, according to people familiar with the matter cited by Investing.com and reports carried by other financial outlets.

The planned move would mark a notable shift in a market that has traditionally been the preserve of institutions and wealthy individuals. According to the SEC’s own recent concept work on expanding retail access, the regulator has been examining whether pooled vehicles can give ordinary investors a more practical route into private companies, private credit and other alternative assets at a time when the number of public companies has fallen and diversification has become more difficult to achieve through listed securities alone.

The proposal, which Reuters-style reporting has indicated was sent to the White House Office of Management and Budget on Monday, would reportedly amend provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940. That would allow investment advisers to charge performance fees to a wider set of clients and could make it easier for registered funds to offer retail exposure to private assets.

The idea is not emerging in isolation. The SEC has already scheduled a roundtable for March 4, 2026, to discuss private market valuations and what it has described as responsible retailisation, with the event intended to help everyday investors better understand how different valuation methods are used in private market products. The agency said the session will feature industry panelists and be streamed live on its website.

Market participants have increasingly argued that the boundaries between public and private investing are already less rigid than they once were. According to industry commentary, many investors now gain indirect exposure to private equity, private credit and real estate through SEC-registered interval funds and tender offer funds, while some advisers point to products such as Morgan Stanley’s PMAX funds as further evidence that demand for these structures is growing.

The SEC’s regulatory agenda for 2026 also includes a line item on enhancing retail exposure to private markets, signalling that the agency is treating the issue as a live policy priority rather than a one-off consultation. Last year, the regulator also eased a policy that had restricted closed-end funds to 15% allocations in private investments, clearing the way for more registered products with meaningful stakes in private equity, private credit and private real estate.

Supporters of a broader retail opening argue that private assets can offer returns that are either higher or less closely tied to public markets, while critics warn that complexity, valuation uncertainty and liquidity constraints can make them unsuitable for many smaller investors. The SEC’s own concept release acknowledges the appeal of pooled structures, but also implies that any widening of access would need to be paired with clearer disclosure and a better grasp of how these assets are priced.

The parallel push to modernise performance fees would also be significant. Under the current framework, such fees are typically associated with sophisticated clients and private funds rather than ordinary retail accounts. Broadening that regime would be a meaningful concession to advisers seeking to align compensation more closely with investment outcomes, but it would also sharpen questions about investor protection and whether the benefits of the new structure would outweigh the risks.

For now, the proposal remains under review. But the direction of travel is clear: after years in which private markets expanded largely outside the reach of everyday investors, the SEC appears to be laying the groundwork for a much wider retail presence.