UK-Based Private Company Shares to Begin Trading Via 'Pisces' Platform in Coming Year

UK-Based Private Company Shares to Begin Trading Via 'Pisces' Platform in Coming Year

Private equity and venture capital are having a field day with the UK's soaring private market. Many companies prefer staying private for longer, leading to a dismal state of the UK public markets, but providing juicy returns to the lucky few investors in the know. Enter PISCES, a new UK platform set to go live later this year and change the game.

PISCES, short for Private Intermittent Securities and Capital Exchange System, will allow private companies to periodically raise capital through auctions and tap into a larger pool of investors. Existing shareholders will also get a chance to sell their shares. Announced in the Chancellor's Mansion House speech last year, PISCES is all about fostering growth and competition within the UK market.

Simon Walls, the Financial Conduct Authority's (FCA) executive director of markets, announced further details on PISCES during a recent press briefing. According to Walls, PISCES is part of a broader strategy to boost growth and competitiveness in the UK. He also mentioned that there is high demand from investors to trade private company shares easily and efficiently within an organized marketplace.

The unique aspect of PISCES is that companies can set their own floor and ceiling prices for their shares, and have some control over who can buy their shares. However, it's retail investors who are being left out of the party. Access to the PISCES platform will be restricted to institutions, high-net-worth individuals, sophisticated investors, and employees of participating companies.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, sees potential for PISCES to gradually open up retail access, but not for at least five years. She believes PISCES could level the playing field between retail investors and institutions.

London's AIM market of smaller listed companies is on track to shrink by a fifth this year, with 61 companies announcing plans to delist. The dearth of new AIM companies and the exodus of companies to overseas exchanges or the main market are concerns for investors and observers. Some believe PISCES could help create a more free-flowing pipeline for IPOs in the City, boosting home-grown start-ups and scale-ups.

However, managing director of wealth manager Evelyn Partners, Jason Hollands, raises a different concern. He suggests PISCES may have a knock-on effect on AIM by luring private companies that might have previously considered joining AIM to choose PISCES instead, as a better growth option. The UK government's decision to halve the inheritance tax relief of AIM companies will also put additional strain on the market, and the industry experts expect a significant number of AIM companies to leave the market over the next couple of years.

PISCES operates under a regulatory sandbox, allowing for testing and adjustments before permanent rules are finalized. The government will review the effectiveness of PISCES by June 2030, and make a decision on whether to make the system permanent or to make changes. In the meantime, keep an eye on PISCES and see how it reshapes the investment landscape in the UK. The party may not be for everyone, but it's poised to shake things up.

Investors, especially high-net-worth individuals and institutions, are eager to trade private company shares through the newly announced PISCES platform, which could potentially level the playing field between retail and institutional investors. This innovative UK platform, designed to foster growth and competition, has the potential to reshape the investment landscape, although retail access might not be available for at least five years.

Read also: