The FCA has revealed the final rules for the new type of private stock market where shares in private companies can be traded, which will be launched later this year.
The Private Intermittent Securities and Capital Exchange System, also known as PISCES, will offer investors easier access to investment opportunities in private companies.
The regulator said: “PISCES is the latest step in the FCA’s wide-ranging reforms to the UK’s markets to boost growth and competitiveness.”
It said the new stock market will allow private companies to tap into a broader range of investors and asset managers and PISCES offers exits for shareholders to sell up.
It said that as companies choose to stay private for longer, there is demand for investors to trade private company shares easily in an organised marketplace. The FCA said PISCES will meet the demand by allowing secondary trading of the shares.
Access to PISCES will be limited to institutional investors, high-net-worth individuals, sophisticated investors and employees of participating companies. Investors will be provided with information about the risks involved to help them make informed decisions.
The platform will be delivered through a sandbox, which will allow the FCA to test the design before finalising a permanent regime in 2030. The sandbox is now open, with shares likely to be traded later this year. Trading systems could include periodic auctions, as well as occasional and time-limited periods of continuous trading.
Firms wishing to run a PISCES platform will have to apply to the FCA, and once approved will be able to run intermittent trading events.
Simon Walls, executive director of markets at the FCA, said: “This bold design rebalances risk, but it is bold risk taking that made the UK the leading financial centre it is today. The new platforms will give investors greater access and confidence to invest in exciting new companies, while early backers and employees can sell up and invest again.”
Emma Reynolds, Economic Secretary to the Treasury, said: “PISCES is a great example of industry, regulators and the government working together to go further and faster on innovative reforms to strengthen UK capital markets, supporting economic growth and putting more money in people’s pocket as part of our Plan for Change.”
