The UK’s FCA is putting forward a new framework for private stock markets called PISCES.
The UK’s Financial Conduct Authority (FCA) has shared a consultation paper outlining its intentions to facilitate trading in private company shares with a new proposed system called the Private Intermittent Securities and Capital Exchange System (PISCES).
This initiative seeks to connect private and public markets, offering investors greater chances to diversify their portfolios while also providing private companies with easier access to capital.
PISCES has the potential to change the financial scene by making trading more flexible and improving access for investors.
This could open up new opportunities for employees, institutional investors, and select high-net-worth individuals to participate in private share transactions.
The regime provides a special opportunity for aspiring traders to enhance their grasp of market dynamics.
A free trading course, provided by various industry participants, aims to enhance the rollout by offering valuable insights into this evolving space.
Private markets embrace innovation through the PISCES regime
The FCA’s proposed PISCES system combines the adaptability of private markets with the organised possibilities of public trading.
In contrast to public markets, issuers operating under the PISCES regime would have the ability to manage when they disclose information and who can participate in trading.
This method seeks to make private trading more attractive while preserving the core benefits of running a private company.
One notable shift from conventional market practices is the absence of public market abuse regulations in PISCES, except when trading activities affect public securities.
This difference aims to encourage innovation by customising regulations to fit the unique characteristics of private markets.
The FCA plans to trial the platform within a five-year regulatory sandbox.
This carefully managed setting will enable companies to create and improve private share trading models while being guided by FCA oversight.
Businesses looking to operate in the sandbox need to seek approval and follow specific trading schedules along with other regulatory guidelines.
Possible advantages and the journey forward
The PISCES initiative aims to spark innovation, encourage healthy competition, and create a space for testing private stock trading platforms.
Enabling employees, institutional investors, and knowledgeable retail investors to trade shares could create meaningful value for private companies and everyone involved.
Simon Walls, the interim executive director of markets at the FCA, shared his excitement about the initiative: “Next year, we will ring the bell on a new private stock market that could change the way private companies access funds and grow.” “It will provide investors with increased access and enhanced confidence to invest in private companies.”
Tulip Siddiq, the Economic Secretary to the Treasury, shared her thoughts, highlighting how this initiative fits into the larger picture of financial reforms designed to enhance competitiveness and encourage investment.
The UK Treasury is set to roll out a legal framework for PISCES by May 2025, and the FCA is anticipated to finalise its rules soon after that. We invite everyone to share their thoughts on the proposal until February 17, 2025.
What sets PISCES apart?
- Oversight for issuers: Private companies decide when to share information and who gets to be part of the investment process.
- Exploring new ideas in a safe space: A five-year trial period will help us test and improve the regime with guidance from the FCA.
The system provides private companies with a fresh opportunity for funding and a chance to transition into the public market.
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