The government has published its consultation response on the Private Intermittent Securities and Capital Exchange System (PISCES), committing to legislate to establish the private stock market by May 2025.

In her Mansion House speech, Chancellor, Rachel Reeves, described PISCES as a “world first” regulated market for trading private company shares where transfers will be exempt from stamp duty taxes on shares.

PISCES seeks to allow for the intermittent trading of private company shares on a multilateral system.

The Treasury stated that the platform will look to respond to the growth of private secondary markets by providing a regulatory framework for structuring trading events that can be accessed by broad pools of investors, using public market infrastructure to support private markets.

PISCES is part of the government’s wider proposals to ‘fire up’ the financial services sector to drive growth, with Reeves arguing that regulatory changes to eliminate risk after the financial crisis in 2008 had “gone too far”.

The government confirmed its intention to proceed with PISCES and it will legislate to set up a PISCES ‘sandbox’ to develop and test the regulatory regime.

Over the five-year sandbox period, firms wishing to run a PISCES platform will need to seek approval from the FCA, and those involved in trading on a PISCES platform will be subject to modified UK regulation under the sandbox regime.

In its consultation response, the government confirmed that PISCES will operate as a secondary market, facilitating the trading of existing shares in intermittent trading windows.

Only shares in companies whose shares are not admitted to trading on a public market can be traded on PISCES.

Furthermore, only institutional investors, employees of participating companies, and investors who can meet the definition of high net worth individuals (HNWI) and self-certified or certified sophisticated investors under the Financial Promotion Order (FPO), will be able to buy shares on PISCES.

London Stock Exchange CEO, Dame Julia Hoggett, said: “We are thrilled to see the government’s endorsement of PISCES and are encouraged by the momentum building to join up innovative regulatory design, tailored markets and targeted policymaking to support the creation of a true funding continuum.

“The focus of the pension reforms and the Mansion House Compact in unlocking the UK’s deep pools of capital to invest in our publicly quoted and private companies combined with the creation of this new cross over market are just what is needed to support companies across the UK to succeed.

“We have a unique opportunity to enable private and public markets to work together to provide the tangible support companies need to access capital and liquidity and investors need to access the broadest range of high-quality assets. We look forward to engaging with the government, regulators and all stakeholders on HMT’s consultation to develop a regulatory framework which plays its part in achieving this vision.”

Also commenting on the proposed introduction of PISCES, Manx Financial Group CEO, Douglas Grant, stated: “Any mechanism that enables entrepreneurs to unlock equity is a welcome innovation.

“However, it's unclear why this approach would necessarily lead to an increase in IPO activity. Given that PISCES serves as an alternative to more heavily regulated stock exchanges, there is a reasonable concern that platforms like AIM might perceive it as a competitive threat, potentially affecting their market position.

“Additionally, a vital factor that requires consideration is the alignment of tax strategies to incentivise entrepreneur participation. Without a supportive tax framework, uptake may be limited.”

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