PISCES – Key questions answered

PISCES is a set of regulations which create a new legal framework[1] for regulated trading platforms for secondary market trading of existing shares in private companies.  Trading will be permitted during intermittent trading windows, for example ad hoc, quarterly, biannually, yearly or as determined by the participating company (the "PISCES Company").

Both UK public and private companies limited by shares as well as companies incorporated overseas, will be able to have their shares traded on PISCES.  Companies already admitted to trading on a public market, whether in the UK or abroad, cannot use PISCES.

Yes.

Yes.  A PISCES Company can determine:

• when its shares may be traded;
• the persons or categories of persons who may buy or sell its shares;
• restrictions on the trading of its shares, including restrictions requiring a minimum or a maximum price; and
• the persons or categories of persons who may receive information about the company or transaction in its shares.

Yes.  A financial intermediary must not place an order to buy a PISCES share when dealing with a person unless:

• that person is a qualifying individual, that is to say:
  • an individual who is employed by, or is a director of or other officer of, the PISCES Company or a company within its immediate group; or
  • an individual who personally provides consultancy or managerial services to the PISCES Company or a company within its immediate group; or
• the financial intermediary believes (on reasonable grounds) that the person is a specified PISCES investor, that is to say:
  • a professional client;
  • a high net-worth individual, a high net-worth company or a self-certified sophisticated investor; or
  • a person who is a trustee of an employee share scheme or a share incentive plan established by the relevant PISCES Company or a company within its immediate group.

The same obligation applies to a PISCES operator who receives an order to buy a PISCES share from a person without the involvement of a financial intermediary.

No.

No.

The core information required to be disclosed includes:

• a business and management overview;
• financial information, including financial statements for the past 3 years or, if less, for so long as the PISCES Company has existed and information on any significant change in the financial position of the PISCES Company since the last balance sheet date;
• information on its capital structure, including information on employee share schemes, persons who hold above 25% of its shares or voting rights, persons who have the right to appoint or approve a majority of its board of directors or any person who has the right to exercise significant influence or control over the PISCES Company;
• information about transactions entered into between the directors of the PISCES Company and the PISCES Company itself;
• an overview of the material and non-ordinary course contracts entered into by the PISCES Company; and
• information about any key material risk factors specific to the PISCES Company.

There is no obligation on a PISCES Company to update any core or other information disclosed during a trading event, after that trading event has closed.

The PISCES regime does not include a public market-style market abuse regime.  Instead, in the PISCES Sourcebook the FCA requires an operator of a PISCES platform to put in place its own arrangements provided they include at least the core information described above.

No.  The PISCES Sourcebook requires the operator of a PISCES platform to make secure the core and other information disclosed by the PISCES Company during a trading event and to ensure that only investors who are entitled to participate in the particular trading event to which the corporate information has been disclosed can access that corporate information.

No.

It will be for a PISCES operator to decide whether or not shares in a PISCES Company must be held in a securities settlement system operated by a central securities depository (for example CREST) or whether the shares are kept in certificated form.

Yes, although appropriate legal and tax advice should be sought before making any changes to existing arrangements or awards.  This is particularly important if a company wishes to amend tax-advantaged share option plans (such as EMI or CSOP) without losing the intended tax advantages of those plans.  The Government recently announced it will legislate to allow employers to amend existing EMI and CSOP contracts to include a PISCES trading event as an exercisable event, but has cautioned that no changes should be made until the legislation has been published.  This is expected later in the Summer.

The trading platform will be delivered through the use of a regulatory sandbox known as the PISCES sandbox.  The PISCES sandbox allows HM Treasury to test, within a live environment, models and practices which would not otherwise be permitted under the existing legal and regulatory framework.

Only recognised investment exchanges (which are not overseas investment exchanges) or persons (established in the UK) who have certain permissions from the FCA (namely permissions to arrange deals in investments, operate a multilateral trading facility or operate an organised trading facility) will be eligible to apply to the FCA to operate a PISCES platform and to participate within the PISCES sandbox.

With the legal framework now in place, potential PISCES operators are now able to apply to the FCA for authorisation to operate a PISCES platform. HM Treasury hopes that the first PISCES shares will trade on a PISCES platform in the Autumn of 2025.  The PISCES sandbox will operate for five years (until 5 June 2030) and during this time the Government will decide whether to make the PISCES regime permanent.

Whether or not the PISCES regime achieves the Government's stated objectives will be seen over time.  For investors, whether they be venture capital, growth capital, private equity, employees or owner/managers, PISCES does provide an opportunity for them to sell down part (or all) of their investment.  How successful this process is will depend on the demand and take-up of shares from buyers.  For companies, PISCES will satisfy calls from their shareholders to provide liquidity in their shares as well as acquainting themselves with a quasi-public market and so preparing them for any future IPO should an IPO be their goal.