PISCES: Will the stars align for private investment?

The Private Intermittent Securities and Capital Exchange System (known as 'PISCES') is a new form of regulated trading platform designed for the intermittent trading of shares in unlisted companies. 

PISCES aims to boost the liquidity of shares in private companies. It is hoped that the availability of PISCES will promote investment and encourage growth in UK companies in particular (albeit non-UK incorporated companies may also participate).

Who is responsible for PISCES?

PISCES is being implemented and operated by the Financial Conduct Authority (FCA), under powers granted by HM Treasury. 

The FCA has recently launched a sandbox to allow the regulatory framework for PISCES to be tested and refined. The PISCES Sandbox Arrangements apply to PISCES operators, trading intermediaries, issuer companies, permitted investors and their advisers.

Who is PISCES for?

Unlisted companies

All private and public companies (including overseas companies) will be able to trade their shares on a PISCES platform, save for companies that already have shares traded on a public market. 

PISCES is expected to help companies broaden or rationalise their shareholder base and incentivise employees. We also expect that PISCES will function as a stepping-stone for companies considering progressing to AIM or the Main Market.

Eligible investors

Due to the increased risks associated with investing in private companies, only certain categories of individual retail investor (known as 'specified PISCES investors') will be able to buy shares through a PISCES platform. These are similar to the categories of persons to whom financial promotions are commonly made under exemptions prescribed by the Financial Promotion Order. This includes high net worth individuals and companies, sophisticated investors and professional investors. 

Institutional investors, employees, directors and officers of the issuer (or a company within its immediate group) and trustees of employee share schemes of the issuer will also be able to participate in PISCES.

Operators and brokers / traders

At present, only recognised investment exchanges (and certain other firms established in the UK with relevant permissions under FSMA) will be eligible to apply to the FCA for a PISCES approval notice (known as a 'PAN'), which will permit them to host a PISCES platform. 

Similarly, only regulated trading intermediaries will be able to place buy or sell orders in the PISCES sandbox.

How does PISCES differ from AIM and other UK regulated markets?

• PISCES will operate as a secondary market only; companies will not be able to raise monies through a PISCES platform.
• Trading of shares must be intermittent, meaning "occasional, not frequent, and of limited duration". It is not yet clear what this means in practice, but it is expected to permit monthly, quarterly, annual and ad hoc trading windows.
• The issuer of the shares will be able to prescribe when shares can be traded and put in place additional restrictions on trading, such as price parameters.
• A 25% threshold will apply for identification of major shareholders (mirroring the PSC regime) although individual PISCES operators may require a lower threshold.
• Financial intermediaries (brokers / traders) will be required to ensure that individual retail investors are permitted to acquire shares through the PISCES platform before orders can be completed.
• The UK Market Abuse Regulation will not directly apply to shares admitted to a PISCES platform. Instead, a narrower regime will apply which will require issuers to disclose 'core information' to investors before a trading event (see below).
• Share buybacks will not at this stage be permitted through a PISCES platform.

What will PISCES mean for participating companies?

Companies who wish to permit their shares to be traded on a PISCES platform will be subject to less onerous regulation than companies whose shares are traded on a UK regulated market or MTF (such as AIM). However, the opportunities for new investment will be more limited; issuers will not be able to raise new capital through PISCES and only certain categories of retail investor will be able to participate. 

Whilst issuers can impose restrictions on buyers and sellers, any buyer restrictions must be 'for the purposes of promoting or protecting legitimate commercial interests' of the issuer and any seller restrictions must be "consistent with existing contractual obligations applicable to the investor as a qualifying individual' (ie new restrictions cannot be imposed). PISCES operators will be required to ensure that buyers and sellers are brought together in a non-discriminatory manner, and that any exclusions are based on objective criteria.

Disclosure obligations

Companies who wish to participate in PISCES will need to disclose certain 'core information' (as mandated by the relevant PISCES operator). This must include (amongst other things) a business overview of the issuer, an overview of the issuer's board and senior management, financial information (including auditors' reports where relevant), information on capital structure and share rights, information about employees' share schemes, an overview of existing material contracts, related party transactions, key material risk factors associated with the issuer / its shares and details of significant shareholders. Operators can impose additional disclosure obligations, and companies can choose to provide additional information.

This 'core information' will not need to be disclosed publicly, but will instead be securely disclosed by the operator (on behalf of the issuer) to potential investors prior to any trading window. 

The issuer will be liable to any investor who suffers a loss as a result of such information being untrue or misleading, or information being omitted where required to be disclosed. Criminal liability may also arise under the Financial Services Act 2012 where a person knowingly or recklessly makes a false or misleading statement or dishonestly conceals any material facts. Boards of issuer companies will therefore need to ensure that a robust verification exercise is undertaken before any such information is provided to the PISCES operator for disclosure.

What will PISCES mean for investors?

We expect PISCES to be attractive for primary investors by offering a new way for shareholders to realise their investment. Existing institutional investors may be more reluctant to make significant new investments through PISCES due to its lower regulatory framework, paucity of information on pricing and the fact that their investments will be for the benefit of third parties and not directly to the PISCES company.

In line with the existing AIM exemption, PISCES trades will also be exempt from stamp duty and SDRT.

Whilst the FCA have confirmed that PISCES is intended to complement (rather than compete with) other available markets, there is some consensus that the availability of PISCES will result in more companies delisting from AIM (particularly given the equivalent tax treatment).

What's next for PISCES?

Eligible firms who wish to operate a PISCES platform are now able to apply for a PISCES approval notice. The London Stock Exchange (LSE) is expected to be one of the first entities to offer a PISCES platform. The LSE has confirmed plans to launch its "Private Securities Market" later this year in a market notice and is already seeking registrations of interest from potential investors.

The PISCES sandbox went live on 10 June 2025 and will run for a 5 year period. The FCA and the Treasury will monitor the sandbox during this period and then decide whether to make PISCES permanent. 

We expect that shares will start to trade on PISCES sometime later this year. Watch this space for further updates.