Activity

The Private Intermittent Securities and Capital Exchange System (PISCES) is a significant innovation in the UK’s financial landscape, aiming to bridge the gap between private and public markets. It provides a structured secondary market for shares in private companies, offering a new avenue for liquidity and facilitating growth for UK businesses.
Here’s a breakdown of the key aspects mentioned:
* Bridging the Market Gap: PISCES is specifically designed to create a secondary market for private company shares. This is crucial for enabling large and growing private companies, even those not immediately considering an Initial Public Offering (IPO), to establish liquidity for their shares. This, in turn, can help them attract further investment and build an active shareholder base for future fundraising rounds. It also serves as a valuable stepping stone for private companies to gain experience and prepare for a potential future transition to public markets.
* UK Government Initiative: The development of PISCES reflects a clear initiative by the UK government to foster growth for UK companies and strengthen the country’s IPO pipeline. By providing a regulated and accessible platform for private share trading, the government aims to enhance the competitiveness of UK markets and support the growth of innovative businesses.
* Tax Exemptions and Employee Share Schemes: To further incentivize participation and promote the new market, the UK government has introduced significant tax benefits:
* Stamp Duty and Stamp Duty Reserve Tax Exemption: Share trades conducted on PISCES will be exempt from stamp duty and stamp duty reserve tax. This reduces the transaction costs for investors and companies, making PISCES a more attractive option.
* Employee Share Option Tax Advantages: The government will legislate, with retrospective effect, to ensure that employees who exercise share options on PISCES can still benefit from existing tax advantages (such as those associated with Enterprise Management Incentives (EMI) and Company Share Option Plans (CSOP)). This is a crucial measure to encourage employee participation and ensure that individuals are not penalized for trading their shares on the new platform.
* Financial Markets Infrastructure Sandbox: Due to its innovative nature, PISCES is being implemented through a financial markets infrastructure (FMI) sandbox operated by the Financial Conduct Authority (FCA). This sandbox environment allows for the testing and refinement of the regulatory framework in a controlled setting.
* Five-Year Duration: The PISCES sandbox is expected to run for an initial period of five years, until June 5, 2030.
* Possibility of Extension: The UK government has the option to extend the sandbox period if needed, or to make the arrangements permanent at an earlier stage, subject to Parliamentary approval. This flexibility allows for adaptation and optimization of the framework based on the insights gained during the trial period.
Overall, PISCES represents a strategic move by the UK to enhance its capital markets, offering a unique solution for private companies seeking liquidity and growth, and providing investors with new opportunities to access promising private businesses. The regulatory sandbox approach and the announced tax incentives underscore the government’s commitment to the success of this new market.

Video courtesy of CSOB

Video courtesy of CSOB