AIFM Services, Custody and Multilateral Trading: The Case for Composable Capital Markets Infrastructure

Key Takeaways

• Composable infrastructure integrates AIFM services, custody and trading into a single regulated framework, eliminating fragmentation.
• AIFM authorisation is foundational to managing AIFs and sets regulatory standards for governance, risk and reporting.
• Integrated custody reduces reconciliation risk and maintains asset connection across issuance and trading functions.
• Regulated MTF status provides institutional participants with transparent price discovery and secondary liquidity for alternative assets.
• Institutions should verify FCA authorisation across all three functions and demand a unified data model without manual reconciliation.

The fragmentation problem in UK alternative asset markets is real and persistent. Institutions that want to issue, hold and trade alternative assets across private and digital markets still face a patchwork of authorised firms, each covering one piece of the regulatory puzzle. AIFM services sit with one provider. Custody sits with another. Trading access requires a third relationship entirely. The costs compound. The operational complexity grows.

That fragmentation is what composable capital markets infrastructure is designed to solve.

What Composable Infrastructure Actually Means

The term "composable" has migrated into capital markets from software architecture, where it describes modular systems whose components can operate independently but also function together without duplication or friction. In capital markets, composable infrastructure means a regulated framework where fund structuring, digital issuance, custody and trading are not separate engagements bolted together after the fact. They are designed from the outset to work as a single system, sharing data, workflows and compliance logic across every stage of an asset's lifecycle.

This matters because alternative assets, especially digital securities, do not behave like listed equities. They require managed issuance processes, verified custody arrangements and trading environments that can handle bespoke terms and lower liquidity profiles. A composable platform handles all of that without requiring the issuer or investor to maintain separate regulatory relationships for each function.

The AIFM Requirement Sets the Foundation

Under the UK's retained Alternative Investment Fund Managers regime, the FCA requires firms managing AIFs above defined thresholds to hold authorisation as Alternative Investment Fund Managers, meeting ongoing obligations covering fund governance, risk management, valuation, liquidity management and investor reporting. These are not administrative checkboxes. They shape how a fund is structured, how assets are valued and how capital can be accessed or redeemed.

That regulatory layer is foundational. Without AIFM authorisation, a platform cannot lawfully manage or structure AIFs for institutional clients in the UK. It is the entry point to the regulated capital stack.

At BPX, our AIFM services support the launch and ongoing management of both new and existing alternative investment funds within a single regulated framework. That includes fund structuring, documentation, regulatory filings and ongoing reporting obligations. Issuers do not need to engage a separate AIFM to access the infrastructure.

Custody Is the Structural Requirement Firms Underestimate

Custody is often treated as a commodity. It should not be. The FCA's Client Assets Sourcebook (CASS) requires firms holding client assets to maintain strict segregation between client and firm assets, with ongoing reconciliation and record-keeping obligations that determine whether assets can be recovered if a firm fails. These rules exist for good reason.

For digital and alternative assets, the custody question is more complex still. Digital securities require controls that extend beyond traditional nominee structures. Private fund interests require documentation and transfer capabilities that vary by asset class. Infrastructure assets held as fund interests require custody arrangements that reflect their underlying terms.

Institutions that separate their custody provider from their AIFM and their trading venue introduce version control and reconciliation risk at every handover point. That risk accumulates quietly and surfaces at the worst possible time.

Our custody and client money services at BPX are integrated within the same regulated framework that supports issuance and trading. Assets held in custody remain connected to the issuance record and the trading infrastructure, which reduces reconciliation friction and supports end-to-end lifecycle management of the kind that institutional participants expect.

Multilateral Trading and the Liquidity Challenge in Alternative Assets

A multilateral trading facility operates under specific regulatory terms. The FCA defines an MTF, under the UK's retained Markets in Financial Instruments Directive (MiFID), as a system that brings together multiple third-party buying and selling interests in financial instruments in accordance with non-discretionary rules. That definition distinguishes a regulated trading venue from a bilateral or OTC arrangement, and the distinction is meaningful.

MTF status means that price formation, order matching and execution occur within a regulated environment, with obligations around transparency, fairness and market abuse prevention. For alternative assets, which historically have traded bilaterally or not at all, this is a structural upgrade that changes how institutions can engage with secondary liquidity.

The liquidity challenge for alternative assets is not simply a question of finding buyers and sellers. It is a question of establishing a venue where institutional participants can engage with confidence that the rules of participation are clear, consistent and regulated. BPX operates a regulated trading environment that supports both primary market access and secondary market liquidity for alternative and digital assets. Real estate, infrastructure, private credit and digital securities can be admitted, traded and settled within one framework, without requiring participants to manage separate bilateral arrangements.

Why Integrating All Three Capabilities Changes the Calculation

Consider what happens when a GP wants to offer secondary liquidity to LPs in a private credit fund. Without integrated infrastructure, the process involves the AIFM approving transfers, a custodian updating records, a trading venue finding counterparties and a legal team managing documentation across all three. Each handover creates latency, cost and the potential for data inconsistency.

With composable infrastructure, those functions are coordinated within one framework. The AIFM function governs the fund. Custody maintains the record. The trading venue provides price discovery and execution. Data flows between them without manual translation.

That is not a marginal efficiency gain. It is a structural improvement in what capital markets can offer to alternative asset managers and their investors. BPX is a member of the FIX Trading Community, the global industry body that maintains electronic trading messaging standards across financial markets. That membership reflects our commitment to interoperability, specifically to ensuring that our infrastructure can connect with both legacy systems and digital rails without friction at the point of integration.

What Institutions Should Look for in a Combined Platform

Any platform presenting itself as combined infrastructure for AIFM services, custody and multilateral trading should be able to demonstrate the following:

• FCA authorisation covering each of those three functions within a clear and singular regulatory perimeter
• A single data model that connects fund records, custody holdings and trading activity without manual reconciliation steps
• Support for both traditional fund structures and digital or tokenised securities across the same infrastructure
• Custody arrangements that comply with CASS and extend to digital asset classes with appropriate controls
• A trading venue with formal MTF status, not an OTC matching service operating under a different authorisation

The regulatory perimeter matters as much as the technology. A platform built on composable principles but authorised in fragments introduces the same risks it claims to eliminate.

The BPX Framework

BPX is a UK-authorised and regulated securities marketplace, established with a single purpose: to provide institutional infrastructure that bridges traditional and digital capital markets without requiring participants to construct that infrastructure themselves from separate components.

Our composable framework supports fund structuring and AIFM services, digital issuance, regulated custody and client money management, and access to primary and secondary markets for alternative assets including real estate, infrastructure, private credit and digital securities. Issuers and investors engage with one regulated counterparty, not a chain of them.

The foundation is FCA authorisation. The architecture is composable. The objective is to make institutional-grade capital markets accessible without sacrificing the regulatory standards that make those markets trustworthy in the first place.