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The UK financial regulator has said trading can begin later this year on new venues for buying and selling stakes in private companies, as it gave the green light to the much delayed scheme.
The Financial Conduct Authority on Tuesday laid out final rules for the Private Intermittent Securities and Capital Exchange System, which is designed to provide a crossover between private and public markets and bolster the UK’s capital markets.
The scheme, which had been proposed by the previous Conservative government in 2022 and then backed by Labour chancellor Rachel Reeves, was originally meant to begin operating in at least a limited capacity by the end of last year.
The London Stock Exchange and others will be able to apply to the regulator to run Pisces trading venues.
Pisces will help companies “tap into a broader range of investors and asset managers” and offer routes for existing shareholders to sell their stake, the FCA said.
“The new platforms will give investors greater access and confidence to invest in exciting new companies, while early backers and employees can sell up and invest again,” added Simon Walls, executive director of markets at the regulator.
The scheme aims to address the shift in focus that has taken place in recent years away from public markets and towards private sources of capital markets, as banking executives increasingly question the need for initial public offerings.
Policymakers hope the plan will boost the faltering pipeline of London IPOs by providing a source of funding for fast-growing companies that are not yet at the point of flotation.
In the US, the Nasdaq Private Market has allowed investors and employees to trade company shares since 2013 and facilitated almost $7bn of trades last year.
However, Pisces has been dismissed by venture capital and private equity executives as unnecessary, amid warnings that it may not attract high-quality businesses. There are also fears that it could cannibalise public markets.
In an effort to make it more attractive, the FCA’s final rules have given companies a greater say over who can buy their shares. It has also reduced the number of disclosures that companies will have to make, including dropping some requirements for financial forecasts and sustainability disclosure, while shareholders who hold less than 25 per cent of a company’s shares will not have to be named.
Pisces will operate under an experimental framework until 2030, which allows the rules to be adjusted.
