A New Marketplace for Private Shares
The Financial Conduct Authority (FCA) is shaking up the private investment space with the launch of PISCES — the Private Intermittent Securities and Capital Exchange System. In its latest consultation paper CP24/29, the FCA outlines how this innovative new platform will operate, creating a fresh marketplace for buying and selling shares in private, unlisted companies.
What is PISCES?
PISCES will be a secondary market platform, meaning companies won’t be raising new capital but instead offering existing shares for trading. The system will run in a five-year sandbox trial period, regulated by the FCA. To participate, companies looking to run a PISCES platform must apply for FCA approval. The marketplace will be open to institutional and professional investors, and retail investors who qualify as sophisticated or high-net-worth individuals. Trading will occur during time-limited intermittent windows.
Key Features of PISCES:
- Tailored Disclosure Rules: Operators must ensure efficient disclosure systems, requiring companies to share “core information” about their business and any price parameters for trading events.
- Equal Access to Information: All participating investors must have simultaneous access to disclosures, but the information doesn’t need to be made public.
- No UK MAR Oversight: PISCES won’t fall under the UK Market Abuse Regulation (MAR). However, operators must monitor disclosures and report any suspected misleading statements under criminal market manipulation laws.
- Liability Standards: Companies will face statutory liability for their disclosures. Negligence applies to core information, but recklessness applies to forward-looking statements like financial forecasts.
A ‘Private-Plus’ Approach
The FCA is taking a bespoke “private-plus” route for PISCES. Rather than applying public market rules, PISCES will build on existing private market practices with a clear buyer-beware philosophy.
Next Steps
The consultation closes on 17 February 2025. The FCA will finalise the rules after HM Treasury lays its final statutory instrument before Parliament, expected in May 2025. Firms interested in operating on PISCES should keep an eye out for further guidance from the FCA in early 2025.
This could be a game-changer for private market investments in the UK, offering more flexibility and access to a traditionally exclusive market.
Next steps
The consultation closes on 17 February 2025 and the FCA will publish its final rules after HM Treasury has laid its final SI before Parliament (expected in May 2025). The FCA intends to publish further information early in 2025 on pre-application engagement opportunities for firms interested in becoming a PISCES operator.
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