The UK is launching a new type of private stock market that will give investors more opportunities to buy stakes in growing companies.
Private Intermittent Securities and Capital Exchange Systems (PISCES) will make it easier and quicker to trade shares in private companies, the Financial Conduct Authority (FCA) said on Tuesday (27 May).
PISCES will connect buyers and sellers of shares in private companies during intermittent trading events. Companies using a PISCES platform can control:
- When their shares may be traded;
- Who can buy their shares;
- A floor and/or ceiling price for their shares;
- Who gets information about the company or any transactions in its shares.
The move to launch a private stock market comes as many companies opt to stay private for longer. PISCES aims to be an innovative and flexible solution for private companies to provide investors with opportunities to trade their shares in a trading event with other interested investors.
It will allow private companies to access a broader range of investors, supporting investment in growth companies and boosting the competitiveness of UK markets. PISCES will allow new investors easier access to growth companies pre-IPO, and allow early-stage investors and other shareholders, including employees, to realise their investments.
The FCA said that it is finalising the rules around PISCE and that these will be published in June. A regulatory sandbox is expected to be launched later this year and run until 2030.
Who can use a PISCES platform?
The following types of investors will be permitted to use the PISCES platforms:
- Sophisticated investors (including self-certified);
- High-net-worth individuals.
- Institutional investors;
- Employees and those providing consultancy and managerial services. (For each trading period, the PISCES company gives a list of individuals to the financial intermediary or PISCES operator.);
- Trustees of employee share schemes;
- Trustees of share incentive plans.
PISCES platforms will also be used by PISCES companies (private companies located in the UK or overseas) as well as financial intermediaries.
A novel idea?
The PISCES regime is to some extent modelled after the Nasdaq Private Market, which provides a secondary market in the US for private company shares and allows for pre-IPO liquidity solutions, said experts at legal firm Dentons.
“Any company, whether UK-incorporated or overseas, will be capable of having its shares traded on a PISCES provided it does not have shares admitted to trading on a public market either in the UK or abroad,” the group said.
“In practice, the PISCES regime will probably be of interest to growth companies and those with a large shareholder base, particularly of employee shareholders.”
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