On 6 March 2024, HM Treasury (HMT) published a consultation setting out the Government’s proposal for a new innovative market that aims to allow private companies to scale and grow, and to boost the pipeline of future initial public offerings (IPOs) in the UK.

The consultation outlines a proposal for a new platform that will allow private companies to trade their securities in a controlled environment and on an intermittent basis. This proposed Private Intermittent Securities and Capital Exchange System (PISCES) incorporates elements from public markets, such as those that offer multilateral trading, and elements from private markets that provide greater discretion on what company disclosures should be made public. 

Participation in PISCES is intended to support companies to scale up and grow, providing liquidity, helping shareholders, including employee shareholders, to realise their gains, and providing an opportunity to companies to rationalise their shareholder base. HMT explains that investors will gain better access to exciting companies while also benefiting from greater transparency and efficiency than is available in private markets. The proposal aims to support the pipeline for future IPOs in the UK, by improving the interface between private companies and UK public markets, and complementing the Government’s wide-ranging and ongoing reforms to boost the UK as a listing destination.

PISCES will be developed using a financial market infrastructure (FMI) sandbox. The consultation sets out the proposed design of the regulatory regime for PISCES and invites feedback. It is aimed at expected participants in PISCES such as potential companies, investors, and market operators; as well as regulated intermediaries (brokers, investment banks etc), professional service firms and trade associations.

Next steps

The Government will continue to consider its approach to designing the regulatory arrangements in an FMI sandbox, to both provide companies with an additional route to access liquidity and investors with greater opportunities to invest in exciting companies who are not publicly trading. The consultation notes that the Government will carefully consider responses, which will be important for informing policy development. Based on the responses received, the illustrative proposal in the consultation paper may change and the Government may seek further engagement from stakeholders to further develop the model.

HMT plans to lay a statutory instrument before Parliament later in 2024, which will provide the legal framework for the PISCES Sandbox. The Financial Conduct Authority (FCA) also intends to consult on the processes for taking part in the sandbox (such as applications and approval) and the FCA rules that will apply to firms within the sandbox, before the sandbox is established at the end of 2024.

The consultation closes to responses on 17 April 2024.