PISCES will allow investors to trade shares in private firms, offering them diversified returns and providing companies with greater funding opportunities. To streamline the process, companies on PISCES will adhere to a less demanding disclosure regime than those on public markets. 

Such opportunities come with risk, which is why the FCA is consulting on risk warnings for investors to help them make informed investment decisions.  

Simon Walls, interim executive director of markets at the FCA, said: “Next year we will ring the bell on a new private stock market that could transform how private companies access funds and grow. It will offer investors more access and a greater confidence to invest in private companies and could act as a stepping stone to public markets for those firms.

“We want to work with industry and ensure we have the right building blocks in place to support investment in growing companies.”

PISCES was a central pillar of the Chancellor’s Mansion House speech just over a month ago, and the FCA has been working in partnership with HMT to build the right framework.  

PISCES follows the FCA’s wide-ranging reforms to the UK’s world leading markets to boost competitiveness by:

• reforming the prospectus regime, to make it cheaper and easier for companies to raise money in the UK
• giving asset managers greater freedom in how they pay for investment research and setting out proposals to extend that flexibility
• opening the Digital Securities Sandbox which allows firms to test innovative new technologies for trading and settling assets
• setting out a roadmap to regulating crypto

The FCA will work with market participants, industry leaders, trade bodies and platform operators to develop a proportionate regulatory framework that can support growth and enable innovation. 

Dan Coatsworth, investment analyst at AJ Bell, said: “The proposed new stock market called ‘Pisces’ could help private companies get used to the idea of slices of their business being owned by different people.

“It might act as a stepping stone towards a full IPO and fits well into broader plans to make the UK a more attractive place for companies to list their shares.

“Pisces should help privately-owned companies get used to regular financial reporting, transparency as a business, and understanding that a company is run for the best interests of shareholders, not the board of directors.

“It could also encourage staff in companies using Pisces to develop a saving and investing habit. One of the biggest stumbling blocks for private company share ownership is that staff are often put off by the general inability to sell those shares at regular intervals.

“A lot of private companies won’t offer the ability for staff to trade shares, meaning some people are stuck owning the equity until the business either lists on a public market or there is an internal event where they can sell down.

“In theory, Pisces could improve liquidity by allowing private company shares to be traded at more regular intervals. However, it has only been designed for intermittent trading, not the continuous trading during market hours that you get with publicly listed stocks. Such restrictions would give a company control over when changes in share ownership can happen.”