PISCES: New platform for intermittent trading of shares in unquoted companies

The Private Intermittent Securities and Capital Exchange System (PISCES) is a new initiative by the UK government, with support from the Financial Conduct Authority (FCA) and the London Stock Exchange, to enable private company shareholders to trade their shares on an exchange without the company going fully public.

Expected to launch later in 2025 once the proposed rules have been finalised, PISCES will provide specific trading windows during which investors and employees will be able to buy or sell shares in private firms. PISCES will impose lower reporting and disclosure requirements on companies, as compared with a full listing on the London Stock Exchange. Trading in shares on PISCES will be exempt from stamp duty, further enhancing its appeal.  PISCES aims to increase liquidity in private markets while providing investors with controlled access to companies poised for growth, potentially reshaping the landscape of UK capital markets.

In this blog, we discuss how PISCES will impact companies and investors.

1. What is PISCES?

PISCES will be a new type of UK regulated platform for trading shares in unquoted companies on an intermittent basis.  Operated as a multilateral system by firms approved by the FCA, PISCES will connect existing shareholders of unquoted companies with a variety of buyers (see Question 4 below for eligible investor types).  In contrast to a primary market where capital can be raised through the issuance of new shares, PISCES will operate as a secondary market for the sale of existing shares only.

2. Which companies can participate?

UK incorporated private and public limited companies, as well as overseas companies, will be able to participate in PISCES, so long as the shares traded on PISCES are not admitted to trading on a public market in the UK or any other jurisdiction.  PISCES operators will determine any admission requirements for their markets, including any minimum corporate governance requirements.

A company with more than one class of shares may elect to have only certain classes of shares traded on PISCES, subject to requirements of the company's articles of association, any shareholder agreement and the PISCES operator rules.

3. What type of shares can be traded?

In addition to not being admitted to trading in any jurisdiction, shares traded on PISCES must be freely transferable at the time of a PISCES trading event. 

It is not yet clear how this requirement will interact with pre-emption provisions, drag-along and tag-along rights in private company articles of association.

4. Who can buy shares on PISCES?

Subject to any restrictions set by participating companies on investor types (see Question 5 below), the following categories of investors will be allowed to buy shares through PISCES:

• Institutional investors.
• Employees of participating companies.
• Employees of companies in the immediate corporate group of participating companies, where their employment is connected to the participating company's business.
• Those who meet the definitions of self-certified sophisticated investors, certified sophisticated investors or high net worth individuals under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

5. How will trading on PISCES operate?

Trading on PISCES platforms will take place during scheduled, time limited, trading windows.  Subject to the PISCES operator rules, participating companies may be able to decide:

• Price parameters (ie a floor and ceiling price) for the shares being traded.
• The frequency of trading windows, eg ad hoc, monthly, quarterly, or annually.
• The duration of each trading window.
• Whether or not to limit access to trading events of their shares to certain investor types.

6. How will settlement take place?

PISCES operators will decide the settlement arrangements for shares traded on PISCES platforms (whether electronically or in a certificated form).  Where electronic settlement is used, participating companies will need to ensure that their shares can be dematerialised into CREST, which may require amendments to their articles of association.

7. What disclosure will be required?

The PISCES regime will not include a public market style market abuse regime.  There will be no requirement to identify and disclose 'inside information', nor to report transactions.

Instead, a bespoke disclosure regime will be introduced under which participating companies will be expected to disclose a standardised set of core information, supplemented by an overarching requirement on PISCES operators to ensure appropriate disclosure arrangements are in place for proper functioning of their markets.  A summary of the core disclosure information proposed by the FCA is set out in Chapter 3 of its consultation paper (CP24/29), the scope of which will be finalised when the FCA publishes the final rules.

Under current proposals, PISCES operators will have a choice as to how to meet the additional overarching requirement but options could include:

• PISCES operator rules requiring disclosure of information other than those listed in the core disclosure information.
• PISCES operator rules requiring disclosure of any other information the directors of a participating company consider relevant to an investor's investment decision (a "sweeper-model").
• Arrangements overseen by a PISCES operator facilitating the provision of information in response to specific requests by investors (an "ask-model").

Several bodies including the City of London Law Society and the Law Society of England and Wales and the UK Finance and the Association for Financial Markets in Europe have expressed a preference for the "sweeper-model" and have suggested that this type of arrangement would allow the core disclosure information list to be shorter and more manageable.  However, the FCA indicated that they do not intend to make material changes to the disclosure requirements but proposed various technical changes.

The FCA proposes that a ‘negligence’ standard will apply to historic information (eg past financial information), which means companies may be liable for negligent misstatements or omission of historic information.  Companies will not, however, have liability to compensate investors if the directors reasonably believed the information to be true and not misleading.  For forward-looking statements (eg forecasts of financial information and details of business strategy for the next 12 months), the FCA proposes that a ‘recklessness or dishonesty’ standard will apply, which means companies will only be liable if the directors have known or been reckless about an untrue or misleading forward-looking statement or have known an omission from the statement is a dishonest concealment of a material fact and they will not be liable for mere negligence.

A company's disclosures will be made available to all eligible investors in a specific trading event through a due diligence portal on PISCES but will not need to be made public.  Warnings will be given to investors to draw their attention to the higher risk of trading on PISCES compared to trading on public markets.  The objective of the proposed disclosure regime is to provide investors sufficient information to make an informed investment decision, while limiting the costs and burdens on participating companies.

8. Can companies use PISCES for share buybacks?

Companies will not be permitted to carry out share buybacks on PISCES at the initial stage.

However, given the potential benefits of share buybacks in supporting liquidity, the UK government will explore whether to allow this at a later stage.

9. What will be the tax implications?

As announced in the 2024 Autumn Budget, PISCES transactions will be exempt from stamp duty and stamp duty reserve tax.  This mirrors the exemption for trades on growth markets such as AIM and Aquis Growth Market.

The government published a technical note in March 2025, which clarifies how PISCES trading events will interact with tax advantaged share schemes and the tax implications for employees selling their shares on PISCES, some key points of which are summarised below:

• Enterprise Management Incentives (EMI): Options can be granted on terms allowing exercise during a PISCES trading window, provided that this is specified in the option agreement from the time the option is granted.However, amending an existing option agreement to allow the exercise of options in a PISCES trading window would be regarded as a release and regrant of the options. The government will continue to consider legislating to allow existing EMI options to be exercised on PISCES.
• Company Share Option Plan (CSOP): Employees can exercise their options during a PISCES trading window, provided that this is clear from the time the options are granted and they are exercised at least three years from grant.Similarly to EMI, existing CSOP rules cannot be amended to allow options to be exercised in a PISCES trading window. The government will continue to consider legislating to allow existing CSOP options to be exercised on PISCES.
• Readily Convertible Assets (RCAs): If at the time of an acquisition of shares by an employee, arrangements exist or are anticipated for the shares to be traded on a PISCES platform, they will be viewed as RCAs and the employer will be required to operate PAYE in respect of any income tax and NICs due.

10. What will happen next?

The FCA will publish the final rules for PISCES after HM Treasury has laid its final statutory instrument before Parliament, which is expected to happen in May 2025. Once the legislation and rules are finalised, PISCES will operate in a "regulatory sandbox" for an initial trial period of five years to test the calibration of the proposed regulatory requirements.

Lessons learned during the PISCES sandbox phase are likely to inform future iterations of the regulatory framework, ultimately shaping a permanent regime for the UK equity capital markets.