PISCES - charting a new course?

What is PISCES?

• PISCES is short for Private Intermittent Securities and Capital Exchange System

• It is an intermittent trading market for buying and selling shares in companies that are not already traded, either in the UK or elsewhere. Those companies can be either private or public companies and do not need to be incorporated in the UK

• As trading will be intermittent, it might only be quarterly, annually or on an adhoc basis

• It is only for secondary trading in existing shares and cannot be used for companies to raise money from new shareholders or for share buybacks by the company

• It is designed to allow investors an early exit route and to provide private companies with easier access to new investors as well as to provide a stepping stone to public markets

Who can use PISCES?

• Although companies have some flexibility on who can participate in trading (see below),  buyers are limited to professional investors, very limited categories of retail investors who meet certain criteria, employees of participating companies and other related individuals such as employees of related companies together with share incentive plans and employee benefit trusts.

• Buyers of shares on PISCES do not pay stamp duty or SDRT

• Companies can only restrict investors from participating in trading events if the restrictions are imposed to promote or protect the legitimate commercial interests of the PISCES company

How will it work for PISCES companies?

• PISCES companies can decide when trading windows will open and for how long and will have discretion over who participates

• PISCES companies can set the price at which the shares are traded and can set both a minimum or a maximum price

• Certain core disclosure information, including both a business overview and a management overview of the company, financial information (including financial statements for the last three years) and key risk information needs to be made available to potential investors before the trading event takes place but the information will not be publicly available  

• There are no on-going disclosure obligations for PISCES companies and UK MAR does not apply

How will it work for PISCES operators?

• Applicants to become PISCES operators will need to either have certain Part 4A FSMA permissions or be a recognised investment exchange and can then apply to the FCA for approval

• PISCES operators will set out their own rules which can include minimum corporate governance requirements. Individual operators have not yet published their bespoke rules given that the FCA approval process (see below) has only just opened

How will it work for intermediaries?

• Most PISCES platforms are likely to operate on an intermediated basis i.e. the PISCES operator will deal with the intermediaries rather than the end investors

• Intermediaries will be required to check the eligibility of a potential investor before taking an order to purchase

When will it be operational?

• Prospective PISCES operators are invited to apply now at the following email address: pisces@fca.org.uk

• Trading events will be operational from later in 2025

• There will be a regulatory "sandbox" until 5 June 2030. This means that PISCES is in trial mode until the Government decides whether it is a success or not. It could be made permanent during this five year period or at the end of the period or it could be wound up if deemed not to be successful. The period could also be extended