The Financial Conduct Authority has outlined proposals for a new platform to enable trading in shares of privately-owned firms under plans to invigorate Britain's lacklustre capital markets and encourage investment.
The watchdog said the Private Intermittent Securities and Capital Exchange System, known as PISCES, could help burgeoning companies tap funding necessary to grow and scale up, while offering investors the chance to diversify with stakes in firms they may not otherwise be able to access.
"With many companies choosing to stay private for longer, there is increasing demand for investors to be able to trade shares in private companies more easily," the FCA said in a statement at the launch of its consultation on Tuesday.
Britain's financial regulators and government ministers are rewriting rules and exploring possible innovation in an attempt to reverse years of declining investor interest in UK equity markets, where listings activity plumbed fresh depths in 2024.
Tulip Siddiq, Economic Secretary to the Treasury, said the platform represented "a significant step forward" in reforms designed to make UK capital markets more competitive. Other reforms include the FCA's UK listing rules revamp and the creation of pension megafunds to channel billions of pounds of potential investment into infrastructure and capital-hungry businesses.
"PISCES will give investors the chance to get in on the ground floor of some of the most exciting companies and support the growth of those businesses," Siddiq said in a statement.
The Treasury is expected to bring the PISCES framework before parliament by May next year, and the FCA will publish its final rules shortly thereafter.
The regulator hopes multiple firms will want to operate a PISCES platform, which will permit intermittent secondary trading in private company shares in a regulated marketplace, with disclosures limited to participating investors.
The PISCES concept has attracted early dissent from some industry sources, who are concerned that a successful PISCES may undermine London's junior Alternative Investment Market or deter companies from going public altogether, limiting its potential to stimulate the moribund market for IPOs.
Others fear company insiders could have access to information not available to external investors, which could confer unfair trading advantages to some participants.
"Our disclosure arrangements aim to reduce this risk by providing appropriate information to investors. However, as the civil or criminal insider dealing regimes will not apply, persons will not be prohibited from sharing and trading on confidential information," the FCA said in its consultation paper.
"Accordingly, it is important that investors understand and accept these limitations before participating," the regulator said.
