Key takeaways:
- PISCES is the framework for a new type of stock market that will give investors more opportunities to buy stakes in private companies
- The PISCES sandbox is now open and the FCA has finalised its rules for the PISCES framework
- Each PISCES platform operator's rules will need to comply with the FCA framework
- The FCA's final rules are broadly along the lines that the FCA had proposed in its consultation, but with more streamlined disclosure requirements – this will hopefully reduce the burden on PISCES companies
- The plan is for trading events to start before the end of 2025
The FCA has announced its final rules for the Private Intermittent Securities and Capital Exchange System (PISCES), the framework that will enable PISCES operators to provide intermittent trading venues for private company shares.
The final rules are broadly in line with those proposed in the FCA's December consultation (see our previous briefing: PISCES: FCA consults on rules for regulated trading platforms for private companies), but some changes have been made – in particular to the disclosure requirements that PISCES operators will need to impose on PISCES companies. Some of the changes had been signposted in an April "early update" by the FCA (see our briefing: FCA refines PISCES plans). The hope is that these final rules will reduce the potential disclosure burden on PISCES companies, although it is worth noting that these are the minimum disclosure requirements and each PISCES operator will have their own rules, compliant with the FCA rules.
Streamlining PISCES disclosure requirements
The FCA has streamlined and clarified the "core disclosure information" that PISCES companies will have to provide in order to have their shares traded on a PISCES platform.
- No mandatory "sweeper": the FCA has confirmed that it will not mandate a "sweeper" model, i.e. where a PISCES operator's rules would require a company to disclose any other information which the company considers relevant for investors in making their decision to trade in PISCES shares. PISCES operators will still be able to choose to implement a sweeper and determine how they apply it, if they consider a sweeper to be appropriate for their PISCES platform.
- Major shareholders: the FCA had initially proposed a 10% threshold for disclosure of major shareholders. Instead, the final rules will permit a PISCES company to disclose its PSC register (i.e. requiring a 25% threshold but with operator discretion to impose a lower threshold). For non-UK companies, the FCA would expect the rules of PISCES operators to permit disclosure by other appropriate means. The FCA has also confirmed that companies do not need to disclose the identity of end investors in exceptional circumstances: where the activities of the company or the characteristics or personal attributes of the person associated with the company would put the person at serious risk of violence or intimidation. This mirrors the Companies Act's PSC register regime.
- Significant related party transactions: significant related party transactions information has been moved from the "significant changes" core disclosure section into a separate standalone core disclosure information requirement.
- ESS disclosures: the final rules clarify what is required to be disclosed in respect of employee share schemes, including any commitments to issue shares in the future and any commitments to support an ESS by funding a trust established for the benefit of employees and/or other members of the workforce.
- Legitimate omissions: the FCA had originally proposed requiring PISCES operators to allow companies not to provide core disclosure information if they identified that information and gave a legitimate explanation as to why. In response to mixed feedback, the FCA has decided to make legitimate omissions optional for PISCES operators to implement for their PISCES.
- Post-trade disclosures: the requirement for core information disclosure to include post-trade disclosures has been removed.
- Price parameters: a new requirement has been introduced to the effect that where a company prepares a price parameter, the company's core information disclosure must include confirmation as to whether the price parameter was prepared with the agreement of another person, e.g. key investor, and provide the identity of that person.
- Historic disclosure access: the requirement to provide operators with access to historic disclosures has been amended to align it with the five-year record retention period.
Next steps
The PISCES sandbox is now open and shares are expected to be traded on PISCES platforms before the end of 2025. In the meantime, firms wishing to become a PISCES operator will need to apply to the FCA and finalise their own operator rulebooks and procedures now that the FCA's framework has been finalised.