UK unveils PISCES private stockmarket to boost startups, employee share options, and IPO pipeline

This week, the UK government announced legislation for Private Intermittent Securities and Capital Exchange System Sandbox (PISCES) – an innovative new type of stock market for private companies that will boost the growth companies of the future and support the UK’s IPO pipeline. 

With many companies choosing to stay private for longer, there is increasing demand for investors, including angel investors and employees, to be able to trade shares in private companies more easily.

It aims to give investors the chance to get in on the ground floor of some of the most exciting companies around, further supporting those businesses to grow. 

Further, the government will legislate to ensure that employees who have share options will be able to exercise them on PISCES and retain tax advantages, making the platform more attractive for companies and investors looking to use PISCES.

To ensure employees can continue to benefit from the tax advantages on their shares, the law will be changed to extend to the existing Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) contracts to also include PISCES. 

This is in addition to the announcement in the Autumn Budget making PISCES transactions exempt from Stamp Taxes on Shares. 

The announcement means that stock markets can launch their PISCES platforms in the coming months with shares likely to be traded in the Autumn. 

"This is a great example of UK financial innovation and the willingness to experiment with new ideas.

 

Today, if you own shares in a startup it's hard to sell them unless the company IPOs or gets acquired. 

 

That means early employees and investors can be waiting for up to a decade to see a return. But PISCES creates a vital additional option; enabling companies to reward founders, employees and backers without waiting for an IPO or M&A event.

 

This is an important, much needed step forward and the Government should be applauded for their innovative thinking."

Emma Reynolds, Economic Secretary to the Treasury, said:

"Getting PISCES up and running will support UK growth companies. This will boost our capital markets and help to grow our economy, putting more money in working people’s pockets as part of our Plan for Change.

We are also ensuring that employees will retain the tax advantages of shares traded on PISCES to boost the attractiveness of the product to high growth companies looking to expand."

Simon Walls, Executive Director of Markets at the FCA, said:

“We are laying the groundwork for a new private stock market that will give investors more opportunities to invest in growing companies.  

Today’s legislation is a big step forward and we will set out the final rules for PISCES soon. Together, this will support an organised marketplace to buy and sell private shares.”

The platform will act as a stepping stone for companies eyeing a listing in future preparing and easing the journey to an IPO. 

The Financial Conduct Authority will publish their rules underpinning PISCES shortly after the legislation comes into force. Thereafter, those wishing to operate PISCES trading events can apply to the FCA. We expect to see the first PISCES trading events take place later this year.

Lead image: Freepik.