PISCES : Liquidity for shareholders, or a damp squib?

How will PISCES work?

PISCES will allow shares in unquoted companies in the UK and overseas to be sold on a limited number of days each year. Its aim is to provide late-stage liquidity rather than early-stage funding. The FCA has recently set out its proposed rules.

The FCA has invited registered exchanges, such as the London Stock Exchange, to apply to become trading venues for these transactions. Each exchange will determine how to apply the FCA’s rules, so variations in requirements between venues are expected.

The FCA rules allow the company to determine:

• when their shares may be traded;
• who may buy or sell their shares;
• restrictions on trading, including setting a floor and ceiling price; and
• who may receive information about the company or the transaction.

The FCA rules require companies looking to trade their shares on a PISCES exchange to disclose certain core information, including:

• a business and management overview;
• financial information, including financial statements for the past three years;
• details of any significant change in financial position since the last balance sheet;
• a list of people with significant control;
• information about transactions between the company and its directors;
• an overview of material or unusual contracts entered into by the company; and
• information about any key material risk factors specific to the company.

This is referred to by the FCA as the “PISCES core disclosure information”. It is possible that individual venues will impose additional disclosure requirements.

Considerations for companies looking at selling on an exchange

Companies and investors have raised several concerns about PISCES, including:

• a potential loss of control for founders and investors;
• the possibility of limited demand during trading events, especially in the absence of institutional or retail investor participation;
• the risk of unrealistic or volatile company valuations;
• a further decline in interest in public listings, which is already a concern for the UK market;
• the possibility of employees or existing shareholders offloading large volumes of stock; and
• the potential for irreparable damage to the AIM sub-market of the London Stock Exchange.

However, there are also compelling reasons for companies to participate in a PISCES platform:

• companies can choose when and how often trading events occur;
• it provides an opportunity for founders and employees to realise gains by selling some of their shares;
• it enables companies to rationalise their shareholder base;
• shares transferred on a PISCES platform may be exempt from stamp duty;
• companies retain control over share pricing;
• companies can choose who is offered shares;
• disclosure is limited, both in terms of content and audience;
• a bespoke regulatory regime reduces exposure to market abuse and financial promotions rules; and
• proposed legislation would allow employers to amend existing EMI and CSOP contracts to include a PISCES trading event as an exercisable event.

Comment

The Government’s growth agenda has made PISCES a far more attractive proposition than it appeared when the initial consultation was launched in December 2024. The lighter disclosure requirements, combined with control over pricing and participant eligibility, make it appealing to investors, founders, and employees seeking liquidity.

However, questions remain about the actual liquidity of the market. Institutional investors are expected to stay away, and without retail participation, the pool of potential buyers may be too small to support meaningful trading. Unless these liquidity concerns are addressed, PISCES risks becoming a damp squib.

Are you thinking about selling shares on a PISCES exchange?

Our Corporate & Commercial team would be happy to explore whether it is the right fit for you, get in touch to start the conversation.