Capital markets – FCA consultation on rules for PISCES

The FCA has published a consultation paper CP24/29 on the Private Intermittent Securities and Capital Exchange System (PISCES), setting out its proposals on how PISCES, which will operate as a marketplace for buyers and sellers of shares in private (i.e. unlisted) companies, might work in practice.

The consultation follows the publication by HM Treasury in November 2024 of its statutory instrument (SI) and policy note establishing the statutory framework for PISCES.

PISCES, which will initially operate in a five-year sandbox implemented and regulated by the FCA, is intended to function as a secondary market only – participating companies will not be able to raise capital using the platform. Once the rules are in place, firms wishing to operate a PISCES platform will need to apply to the FCA. Institutional and professional investors, as well as retail investors who meet the criteria to be considered as sophisticated or high net worth investors, will be permitted to buy shares on PISCES during time-limited intermittent trading windows.

The FCA says it is taking a “private-plus” approach to its PISCES rules, proposing a bespoke regime that builds on private market practices on a “buyer-beware” basis, rather than using public market standards as a starting point. Key proposals for the operation of PISCES include:

• The disclosure regime will be based on: (i) an overarching requirement on the PISCES operator to have appropriate disclosure arrangements for the efficient and effective functioning of its market; and (ii) PISCES operator rules that require participating companies to provide “core information” – this would include information about the company and its business and details of any price parameters set for a PISCES trading event.
• Disclosures must be available to all investors participating in the trading event at the same time (but will not need to be made public).
• UK MAR will not apply to PISCES but operators will need to monitor companies’ compliance with their disclosure rules, and notify the FCA where they suspect disclosures may constitute misleading statements under the criminal market manipulation regime.
• There will be a statutory liability regime for disclosures – the negligence standard will apply to core information but certain forward-looking information (such as forecasts of financial information) will be subject to a higher recklessness standard.

The consultation also covers the FCA’s approach to considering applications to operate a PISCES platform, as well as other proposals for how PISCES operators must organise and run trading events.

For more detail on PISCES, see our snapshot here.

Next steps

The consultation closes on 17 February 2025 and the FCA will publish its final rules after HM Treasury has laid its final SI before Parliament (expected in May 2025). The FCA intends to publish further information early in 2025 on pre-application engagement opportunities for firms interested in becoming a PISCES operator.