INFRASTRUCTURE
Infrastructure matters as much as Regulations
Infrastructure matters as much as Regulations
By
By
Daniel Jarvis
Daniel Jarvis
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DANIEL JARVIS
When I read about MFS collapsing with accusations of double-pledging collateral and an estimated £930m shortfall, it didn't come as a shock.
It's not the first time private credit has been embarrassed by the same basic theme: collateral you can't properly see, in a system that isn't properly real-time. Recently, BlackRock, the world's largest asset manager, had to limit withdrawals from its private credit fund after receiving redemption requests it couldn't fulfil. Investors wanted out but the fund didn't have the liquidity.
The underlying system moves far too slow with nothing in real time. There's a gap between when something happens and when it's recorded and then another gap before it becomes visible to the people who actually need to see it.
This gap is where the problems happen and I've seen many versions of this for years in UK property lending. Not because lenders are stupid. Because the system isn't designed for instant truth.
People assume that if someone is doing two things at once, two purchases, two loans, two structures, surely someone in the chain will spot it, But in practice, you've got different counterparties, different workflows, different systems and a register that updates slowly.
Even in vanilla property transactions, Land Registry processing times can run into months, depending on the application type, so the system ends up relying heavily on one thing: the borrower being honest.
And once you accept that… you can see why bad actors keep finding the same weak spot.
In normal retail mortgages, things are at least conceptually simple: one title, one asset, one lender registering a legal charge, but in portfolio lending, the type of property-backed private credit MFS was involved in, it gets messy fast.
You've got portfolios, SPVs, multiple lenders, multiple facilities, multiple slices of collateral.
And crucially: there's still a timing gap between money moving and security being visible and enforceable. That gap is what allows the same underlying value to be shown to more than one party, before the world catches up.
And SPVs add another layer: right now, there's no clean single screen where you can instantly see all assets held and all charges against them across the structure. You end up pulling lots of separate checks. It's slow. It's expensive, easy to miss something and easier for someone to hide something. That's exactly the environment where double-pledging becomes possible.
To close the window, the principle is simple: The moment funds are released should be the moment a lock is placed on the asset and that lock is visible. Not visible in three months when the paperwork lands.
So if Lender A releases funds and registers a charge, Lender B can't pretend they didn't know. They search, they see it and they can stop immediately.
That's why I believe that the infrastructure matters just as much as regulation and it is because rules only work if the system actually makes them enforceable in real time.
I'm not talking about tokenisation as a marketing word, I mean, a system where ownership and charges are digitally native and legally linked to title, so the ledger isn't just information - it's the record that actually matters.
In that kind of setup (almost certainly permissioned, with authorised access), an SPV can't hide in complexity the same way. A due diligence lawyer can see holdings and charges in one view, instantly. It is then far harder to play games when the audit trail is native.
MFS could still have tried all the same behaviours. They could have tried to inflate values. They could have created complexity. They could have pushed the edge, but what becomes mechanically difficult is the double-pledge.
Because the moment Lender A funds and the charge is recorded, it's visible.
And if multiple lenders try to fund at the same time, a modern ledger still has ordering. Only one can be first. Everyone else sees the updated state. That's the point: you don't rely on everyone being perfect. You make the exploit window disappear.
This is what markets do when they don't trust the data. When investors can't properly verify assets, collateral, marks or valuation quality, they don't politely complain, they apply a haircut.
Reuters Breakingviews cited Morningstar data showing the median listed BDC trading around 73% of its stated worth. That's a 27% discount, which is the market saying 'we don't fully believe your marks.'
And this week proved them right. BlackRock capped withdrawals. Blackstone needed $150 million from senior management just to meet redemption requests. Not small players showing cracks, these are the biggest names in finance. That discount is actually the price of opacity.
The UK is still running on legacy rails and legacy timelines. Land Registry processing alone makes real-time truth hard to achieve. The average UK property transaction now takes 14-20 weeks. That costs the economy an estimated £1.5 billion annually in failed sales and administrative friction.
As one conveyancer recently put it: we're burdened with a process created to deal with transactions in the 19th century. Compare this to somewhere like Dubai, Saudi Arabia and others, they are already solving this in a controlled way.
Dubai Land Department launched Phase II of its real estate tokenisation project, enabling regulated resale in the secondary market from 20 February 2026, within a pilot framework.
Whether you love or hate the direction of travel, the point is: they're building the rails while most are still debating the concept.
Private credit grew to roughly a $2 trillion market pretty fast. Regulation can't keep up with that pace, so standards slip, as does due diligence. People get lazy, people get greedy. Sometimes both.
So yes, you can respond by adding regulation on top of regulation but that always pushes burden onto people behaving correctly. Whereas, if the system itself makes certain behaviour mechanically impossible, you don't need to rely on honesty and paperwork moving at the speed of 1997.
Overall, there should be a much larger push to fix the underlying infrastructure. There's a bigger upside here than stopping fraud. When ownership and charges are transparent, verifiable, enforceable and near real-time, that's when you can actually innovate safely. Right now, lending is limited by what you can reliably verify and enforce.
If the rails are strong, you can expand what's acceptable collateral because verification and enforcement is stronger, not weaker. That's how you get faster credit decisions, cleaner risk, more confidence in cross-border lending and more types of assets becoming financeable, without turning lending into the Wild West.
Dubai & Saudi Arabia are running pilots and I'd expect this to become normal over time. For the UK, it will take political will or more collapses like MFS, to force the issue but the demand is already there. The tech is already there. Institutions are already moving.
The missing piece is the boring one: infrastructure that makes truth real-time and makes exploits mechanically hard. Once the infrastructure is proper, you not only prevent fraud but you unlock lending that just isn’t possible today.
When I read about MFS collapsing with accusations of double-pledging collateral and an estimated £930m shortfall, it didn't come as a shock.
It's not the first time private credit has been embarrassed by the same basic theme: collateral you can't properly see, in a system that isn't properly real-time. Recently, BlackRock, the world's largest asset manager, had to limit withdrawals from its private credit fund after receiving redemption requests it couldn't fulfil. Investors wanted out but the fund didn't have the liquidity.
The underlying system moves far too slow with nothing in real time. There's a gap between when something happens and when it's recorded and then another gap before it becomes visible to the people who actually need to see it.
This gap is where the problems happen and I've seen many versions of this for years in UK property lending. Not because lenders are stupid. Because the system isn't designed for instant truth.
People assume that if someone is doing two things at once, two purchases, two loans, two structures, surely someone in the chain will spot it, But in practice, you've got different counterparties, different workflows, different systems and a register that updates slowly.
Even in vanilla property transactions, Land Registry processing times can run into months, depending on the application type, so the system ends up relying heavily on one thing: the borrower being honest.
And once you accept that… you can see why bad actors keep finding the same weak spot.
In normal retail mortgages, things are at least conceptually simple: one title, one asset, one lender registering a legal charge, but in portfolio lending, the type of property-backed private credit MFS was involved in, it gets messy fast.
You've got portfolios, SPVs, multiple lenders, multiple facilities, multiple slices of collateral.
And crucially: there's still a timing gap between money moving and security being visible and enforceable. That gap is what allows the same underlying value to be shown to more than one party, before the world catches up.
And SPVs add another layer: right now, there's no clean single screen where you can instantly see all assets held and all charges against them across the structure. You end up pulling lots of separate checks. It's slow. It's expensive, easy to miss something and easier for someone to hide something. That's exactly the environment where double-pledging becomes possible.
To close the window, the principle is simple: The moment funds are released should be the moment a lock is placed on the asset and that lock is visible. Not visible in three months when the paperwork lands.
So if Lender A releases funds and registers a charge, Lender B can't pretend they didn't know. They search, they see it and they can stop immediately.
That's why I believe that the infrastructure matters just as much as regulation and it is because rules only work if the system actually makes them enforceable in real time.
I'm not talking about tokenisation as a marketing word, I mean, a system where ownership and charges are digitally native and legally linked to title, so the ledger isn't just information - it's the record that actually matters.
In that kind of setup (almost certainly permissioned, with authorised access), an SPV can't hide in complexity the same way. A due diligence lawyer can see holdings and charges in one view, instantly. It is then far harder to play games when the audit trail is native.
MFS could still have tried all the same behaviours. They could have tried to inflate values. They could have created complexity. They could have pushed the edge, but what becomes mechanically difficult is the double-pledge.
Because the moment Lender A funds and the charge is recorded, it's visible.
And if multiple lenders try to fund at the same time, a modern ledger still has ordering. Only one can be first. Everyone else sees the updated state. That's the point: you don't rely on everyone being perfect. You make the exploit window disappear.
This is what markets do when they don't trust the data. When investors can't properly verify assets, collateral, marks or valuation quality, they don't politely complain, they apply a haircut.
Reuters Breakingviews cited Morningstar data showing the median listed BDC trading around 73% of its stated worth. That's a 27% discount, which is the market saying 'we don't fully believe your marks.'
And this week proved them right. BlackRock capped withdrawals. Blackstone needed $150 million from senior management just to meet redemption requests. Not small players showing cracks, these are the biggest names in finance. That discount is actually the price of opacity.
The UK is still running on legacy rails and legacy timelines. Land Registry processing alone makes real-time truth hard to achieve. The average UK property transaction now takes 14-20 weeks. That costs the economy an estimated £1.5 billion annually in failed sales and administrative friction.
As one conveyancer recently put it: we're burdened with a process created to deal with transactions in the 19th century. Compare this to somewhere like Dubai, Saudi Arabia and others, they are already solving this in a controlled way.
Dubai Land Department launched Phase II of its real estate tokenisation project, enabling regulated resale in the secondary market from 20 February 2026, within a pilot framework.
Whether you love or hate the direction of travel, the point is: they're building the rails while most are still debating the concept.
Private credit grew to roughly a $2 trillion market pretty fast. Regulation can't keep up with that pace, so standards slip, as does due diligence. People get lazy, people get greedy. Sometimes both.
So yes, you can respond by adding regulation on top of regulation but that always pushes burden onto people behaving correctly. Whereas, if the system itself makes certain behaviour mechanically impossible, you don't need to rely on honesty and paperwork moving at the speed of 1997.
Overall, there should be a much larger push to fix the underlying infrastructure. There's a bigger upside here than stopping fraud. When ownership and charges are transparent, verifiable, enforceable and near real-time, that's when you can actually innovate safely. Right now, lending is limited by what you can reliably verify and enforce.
If the rails are strong, you can expand what's acceptable collateral because verification and enforcement is stronger, not weaker. That's how you get faster credit decisions, cleaner risk, more confidence in cross-border lending and more types of assets becoming financeable, without turning lending into the Wild West.
Dubai & Saudi Arabia are running pilots and I'd expect this to become normal over time. For the UK, it will take political will or more collapses like MFS, to force the issue but the demand is already there. The tech is already there. Institutions are already moving.
The missing piece is the boring one: infrastructure that makes truth real-time and makes exploits mechanically hard. Once the infrastructure is proper, you not only prevent fraud but you unlock lending that just isn’t possible today.
