The government has now published its response statement setting out the next steps for PISCES. This is the Private Intermittent Securities and Capital Exchange System which we covered in our earlier update available here.  When launched PISCES will be a new type of regulated trading platform which allows for the intermittent trading of existing shares on a multilateral system. 

Following the introduction of the new PISCES regime, a number of PISCES platforms should be established. Eligible companies will be able to apply for their shares to be admitted to trading on those platforms. FCA authorised firms interested in operating a PISCES platform will need to seek approval from the FCA.

See below for FAQs which contain more detail. 

What companies will be eligible? UK private and public limited companies and overseas companies will be eligible for admission to trading on a PISCES platform. However a company which already has its shares admitted to trading on a public market in the UK or overseas will not be eligible.

Will a company need to publish a prospectus before its shares are admitted to trading on a PISCES platform? No. The response confirms that the government will not require a prospectus to be provided for shares admitted to trading on a PISCES platform.

Who can buy shares in a company which has its shares traded on a PISCES platform? Access will initially be restricted to:

  • Institutional investors
  • employees of participating companies
  • employees of companies in the immediate corporate group of participant companies, where their employment is connected to the participant company’s business and 
  • investors who can meet the definition of high net-worth individuals and self-certified or certified sophisticated investors under the Financial Promotion Order.

Retail investors will not be able to buy shares in a company with shares admitted to trading on a PISCES platform. The government has committed to reviewing this decision.

When will trading happen? Trading will happen in intermittent trading windows (e.g. ad hoc, quarterly, biannually, yearly etc) rather than on a continuous basis during trading hours. The focus will be on bespoke trading windows. Subject to the PISCES operator’s rules, companies will have the flexibility to decide the length between trading windows and the duration of each trading window.

Can a company raise capital on a PISCES platform? No. PISCES will not facilitate capital raising through the issuance of new shares. Its intended to act as a secondary market in existing shares only and will not support primary or secondary share offers.

Can a company with shares admitted to trading on a PISCES platform carry out a share buyback on that platform? No. Since liquidity may be limited, this is feels like a missed opportunity. However, the government has committed to reviewing this position following the initial launch of the PISCES sandbox.

Will UK MAR or an equivalent regime apply to PISCES? No. In contrast to the position outlined in the original consultation, the PISCES regime will not include a public market style market abuse regime which is great news. Instead, the PISCES regime will rely on a set of core disclosures / a bespoke disclosure regime for PISCES which will be set out in the PISCES rules published by the FCA. The response statement confirms that participant companies will not be required to identify or disclose all “inside information” in the manner required on public markets.

What about public disclosures by companies on PISCES? Companies with shares admitted to trading on PISCES will not be subject to a public disclosure regime. Instead the plan is for a private disclosure perimeter to be established so that access to detailed company information is restricted to participants on PISCES, although maintaining the integrity of this perimeter is likely to be a challenge.

Will there be any transaction reporting requirements?  No in a change from the original proposals, the PISCES regime will not contain any transaction reporting requirements. 

If a company's shares are traded on a PISCES platform will the Takeover Code apply? No. In RS 2024_1 - Companies to which the Takeover Code applies the Panel made it clear that in the future the Takeover Code will not apply to a UK registered company which is not UK quoted (and which has not recently been UK quoted) solely by virtue of its securities or other interests being traded using another platform, such as PISCES.

If a company's shares are traded on a PISCES platform will it be subject to additional corporate governance requirements? At this stage we don't know. An operator of a PISCES platform will have discretion as regards setting minimum corporate governance requirements as part of their requirements for admission to trading. The draft legislation does not itself impose any corporate governance requirements.

What will this mean for the articles of association of a participating company? The response statement does not cover this level of detail but notes that the government expects that shares will be free of restrictions affecting transfer at the time of a PISCES trading event to ensure fair, orderly, and efficient trading. So the articles of a PISCES participating company will need to be amended to:

  • reflect this requirement
  • take into account the admission requirements published by PISCES platform operators 
  • reflect the availability of trading windows.

There will be plenty of questions as regards the application of pre-emption rights, shareholder eligibility criteria and how those relate to “permissioned trading events” (in essence trading events with restricted access) but the answers to those questions will depend very much on the platform rules and the circumstances of each company. Any shareholders' agreement will also need to be updated before a company joins a PISCES platform.

What about stamp duty? Transactions on a PISCES platform will be exempt from stamp duty and stamp duty reserve tax.

What's next?

The current plan is for the relevant legislation to take effect in 2025. A draft statutory instrument was published alongside the response statement and is available here: The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025. Technical comments on the draft SI should be provided by 9 January 2025. The FCA will also publish rules for PISCES.

Once the relevant legislation and FCA rules are in place, the current expectation is that PISCES will run for an initial trial period of five years. In the regulatory jargon, this means that a PISCES sandbox will be established. If that trial period is successful, PISCES and PISCES platforms will become permanent features in the UK. It will then be possible to assess whether the government's objectives of PISCES providing a steppingstone to listing on public markets and supporting private company growth have been achieved or not.

How can we help?

If you would like to discuss PISCES and what it might mean for your company, please speak to your usual contact at Burges Salmon or Nick Graves, head of the firm's Corporate Department.