The US financial regulator has set out a raft of proposals to widen retail investors’ access to alternative assets, handing a further boost to private credit as the industry pushes into the retail market.

The Securities and Exchange Commission (SEC) voted this week to propose a series of rule amendments. These include “modernising” the interval fund framework so vehicles can schedule repurchases at times that better match the liquidity profile of their portfolios, and amending fund registration and reporting forms to require disclosure of performance-based compensation.

Taken together, the changes are designed to open up alternatives, including private credit, to a wider pool of retail investors. The market has historically been restricted to those who meet certain wealth or income thresholds.

“Investor demand for private market investment opportunities is growing, and one of my priorities for the commission is to explore ways to facilitate the ability of individual investors to participate in private markets, while at the same time protecting those investors from bad actors and fraud,” said SEC chair Paul Atkins.

The regulator is separately seeking comment on new routes to accredited investor status that do not depend on wealth, including passing an exam to be developed by Finra or holding professional credentials such as the CFA or CFP.

It also proposed changes to incentivise registered investment advisers (RIAs) to offer private market strategies to regulated funds, including allowing them to receive performance-based compensation from certain categories of client, such as regulated funds.

The proposals follow similar moves by the US government last year, when President Donald Trump signed an executive order allowing private credit and other alternative assets into 401(k) retirement accounts.

Retail demand for alternatives has also grown alongside the proposed rules and the executive order, naturally adding pressure to widen access, said Shane McGreevy, compliance consultant at STP Investment Services.

Since the order was signed, private credit managers have been hiring defined contribution (DC) specialists, launching new products and striking partnerships in a bid to win a slice of the near $14tn (£10.5tn) US 401(k) market. However, challenges such as litigation risk and lingering reservations continue to hang over the industry.

Commenting on the SEC’s latest proposals, McGreevy warned that a balance needed to be struck as retail access to private markets widens: “how do you give more investors access without losing the protections that are there for a reason?”

Private markets differ markedly from public markets, particularly on liquidity, valuation and risk, and recent events at US business development companies (BDCs) underline the growing need to educate retail investors on those differences.

McGreevy said elements of that balance could be seen in some of the SEC’s proposals on interval funds and performance-based compensation. At the same time, he pointed to the regulator’s recent focus on private credit valuations. “A good reminder that managers and sponsors need strong processes in place to make sure valuations reflect the cash flows, performance, and underlying economics of the private market investments,” he added.