In this two-part article series, we provide an overview of the new Private Intermittent Securities and Capital Exchange System (PISCES). In this first part, we cover what PISCES is, why it's been developed, and who can use it.
Overview and context
What is PISCES?
PISCES is a new intermittent trading venue developed by HM Treasury (HMT), the Financial Conduct Authority (FCA), the London Stock Exchange (LSE), and other market participants. It functions as a regulated marketplace that enables existing shareholders of private companies to exchange their equity holdings on an intermittent basis and within a rigid framework.
The platform merges characteristics of publicly traded venues, including multilateral exchange mechanisms, with features typical of private transactions, notably enhanced control over information disclosure obligations. By blending these attributes, PISCES positions itself as a strategic bridge between the two market types.
The platform will enable existing shareholders in unquoted companies to sell their holdings through periodic auction processes. As a secondary market for existing shares, PISCES facilitates transactions between current shareholders and prospective investors (with limited involvement from the issuing company).
Importantly, PISCES will not be a forum that facilitates the offer or sale of new shares in participating companies, meaning that it can't serve as a vehicle for unquoted companies to raise new (primary) capital.
Why is PISCES being developed?
Due to the trend of private companies remaining privately held for longer, PISCES has been conceived to address the growing need for exit mechanisms amongst existing shareholders of unquoted companies.
PISCES is a mechanism to provide liquidity, allowing shareholders – including employee shareholders and option holders – to realise value from their interests, whilst also affording companies the opportunity to streamline their shareholder base. In doing so, PISCES also provides an opportunity for private investors (who perhaps historically haven't been able to participate in private fundraising rounds) and later-stage funds to acquire shares in unquoted companies.
The availability of PISCES as an exit mechanism therefore enhances the attractiveness of early-stage investment and share-based remuneration schemes, as stakeholders can anticipate more viable liquidity options in the future.
Timing and regulatory framework
HMT has established PISCES as a sandbox pilot scheme initially, allowing the modification and disapplication of legislation and regulation over a period of five years. The government and the FCA will monitor outcomes during the lifetime of the sandbox, retaining the ability to terminate or make the arrangements permanent at an earlier stage if appropriate, subject to Parliamentary approval.
To be a PISCES operator, a firm must be a legal entity established in the UK and hold either recognised investment exchange status or specific regulatory permissions. PISCES operators will be able to set their own admission requirements for companies that want to have their shares traded on their PISCES.
The FCA rules on market access for PISCES investors assume that retail investors will buy or sell PISCES shares via an intermediary, rather than interacting directly with the PISCES operator. An intermediary is required to comply with strict requirements before they can promote or distribute PISCES shares to retail investors.
The PISCES sandbox is now open, with prospective operators invited to apply, and will remain open for a period of five years. Shares are likely to be traded on PISCES in 2025 or soon after. The FCA announced on 26 August 2025 that the London Stock Exchange Group was approved as the first operator of a PISCES.
Eligibility criteria
Which companies can use PISCES?
PISCES is available to companies whose shares are not admitted to trading on any public market in the UK or abroad. This includes both private and public limited companies incorporated in the UK, as well as overseas companies, provided their shares are not publicly traded in the UK or elsewhere. The eligibility of a company does not depend on where it is incorporated or headquartered.
A PISCES operator may, under its own rules, require companies to satisfy minimum corporate governance standards as a prerequisite for admission.
Who can sell shares on PISCES?
The PISCES framework permits operators to establish trading venues where current shareholders of private companies can divest their equity holdings.
This mechanism benefits several key stakeholder groups:
- Founders: By facilitating partial liquidity events, the platform enables founding shareholders to extract value from their equity stakes whilst simultaneously reducing personal financial risk that might otherwise depend on a future full exit event.
- Early-stage investors: The system creates pathways for initial backers, including angel investors and venture capital funds, to transfer their shares to later-stage investors, promoting the redeployment of seed and early-stage funding within the UK's innovation ecosystem.
- Employees remunerated in shares: Employees and senior management holding equity acquired through remuneration packages, such as options, gain opportunities to convert these holdings into cash. The sale of such shares remains subject to any rules set out within the relevant employee stock option plan.
Can a PISCES company restrict who can sell shares on PISCES?
It is expected that companies will impose trading restrictions, including:
- the classes of shares which are tradable
However, the FCA rules say that companies cannot stop existing shareholders from selling their shares of a class being traded on PISCES (except for individuals, such as employees and contractors, who are 'qualifying individuals' consistent with any existing contractual obligations on them).
What shares can be sold on PISCES?
PISCES will permit existing shareholders of private or public limited companies to sell their shares in direct secondary transactions. It won't support the issuance or sale of new shares, so unquoted companies can't use PISCES to raise new (primary) capital.
The government expects that, at the time of a PISCES trading event, shares should be free from transfer restrictions to ensure fair, orderly, and efficient trading. Rules on free transferability are anticipated to be set by PISCES operators.
Any restriction on transferability after a trading event would need to be disclosed as part of disclosure of restrictions on the future transferability of a company's shares prior to a trading event, as required by the FCA.
It is so far unclear whether companies will be able to require that new investors sign up to a shareholders' agreement. If they are unable to do so, any relevant provisions which are intended to bind investors would need to be included in the company’s articles of association.
Who can buy shares on PISCES?
Subject to certain criteria, both UK and international professional and institutional investors may invest in unquoted companies via PISCES. The platform is also open to retail and other investors, provided they fall into one of the following eligibility categories:
- high net worth individuals
- high net worth companies, unincorporated associations etc.
- PISCES certificated investors
- self-certified sophisticated investors
- trustees of a share incentive plan
- qualifying individuals (including employees, directors or other officers, consultants, and other individual contractors).
PISCES operators and any financial intermediaries (known as Registered Auction Agents under the LSE PISCES rules) must not place orders unless they have verified that the purchaser is a qualifying individual or they have reasonable grounds to believe that the client will fall into one of the other categories immediately prior to the share purchase.
Can a PISCES company restrict who can buy shares on PISCES?
Companies utilising PISCES will probably seek to maintain authority over which categories of purchasers may acquire their securities through the platform. To accommodate this preference, PISCES operators can offer issuers the option to restrict participation in auctions to designated investor classes through 'permissioned trading events'.
Access to a trading event may only be restricted if it serves the purpose of promoting or protecting the legitimate commercial interests of the company, such as preventing a competitor from acquiring a stake in the company. Whilst any restrictions must be objective, non-discriminatory, and published in advance of the trading event, it's possible that companies will opt to interpret these criteria narrowly so as to provide the company with greater flexibility over who it excludes from an auction process. These regulations are mirrored in the LSE PISCES rules, which refer to such trading events as 'permissioned auctions'.
Look out for the second part of our PISCES series which will be released shortly. In the meantime, our specialist teams are monitoring these developments closely and are available to discuss how these changes could benefit your company and employees. Please contact us to discuss any queries.
