We are helping industry get ready for PISCES
We consulted on the regulatory framework for the Private Intermittent Securities and Capital Exchange System (PISCES) sandbox in December 2024 (CP24/29). PISCES will be a new type of platform that will enable the intermittent trading of private company shares.
We are providing an early update following the closure of the consultation on the potential impact of the feedback on our final rules to support firms who intend to operate a PISCES. We are doing this now to give firms sight of our thinking as they are working up their plans. However, final rules for PISCES remain subject to the FCA Board’s agreement.
Feedback received and our likely response
Our consultation proposals for PISCES were designed to build on existing features of private markets.
Through a 'private plus' approach, we proposed to enable a variety of PISCES models to be tested, supporting growth, innovation and competition. Most respondents to CP24/29 supported this approach and the flexibility incorporated in our proposals. We do not, therefore, intend to make material changes to our proposals, nor mandate a 'sweeper' model for additional company disclosures, as set out as an alternative approach in CP24/29.
However, we do intend to propose various technical changes. These respond to feedback that we should more fully align PISCES with private market practice, where we feel these would allow us to maintain proportionate standards appropriate for PISCES.
We are aware that potential operators of a PISCES require further information on expected changes to the proposed framework to develop their own rulebooks and to engage with their participants. To assist with that, we set out the changes we are minded to propose to the FCA Board in the table below.
The positions we outline in this statement are subject to further development and may be adjusted as we develop our rules instrument for PISCES. Final rules for PISCES will be set out in a Policy Statement which we expect to publish in June 2025 and any differences with the proposed changes described here will be clearly identified.
Our expectation remains that the PISCES sandbox will then open for applications.
Post-consultation changes we intend to propose
| Proposal in CP | CP para | The change we are minded to make |
|---|---|---|
| Core disclosures – Financial Information | 3.14, Table 2, Item 3 | The final rules to more clearly set out that an auditor’s report is only required to be disclosed where financial statements have been audited, and where an auditor’s report is available. The final rules to also require, where management accounts are disclosed in place of financial statements, that these make clear that they may not have been prepared on the same basis as disclosed financial statements. |
| Core disclosure – Employee Share Scheme | 3.14, Table 2, Item 6 | The final rules to more clearly set out our expectation that disclosures must include information concerning: any rights to acquire shares (reported on an aggregated rather individual basis); any future commitments to issue new shares to satisfy awards granted; and any future commitments to fund an employee benefit trust (to identify rights, dilution and liability risks). |
| Core disclosures – Directors’ transactions | 3.14, Table 2, Item 7, and 3.15 | The final rules to not extend this requirement to other major shareholders’ trading intentions, and to more clearly set out that director trading intentions should be correct as at the start of the trading period only. |
| Core disclosures - Litigation | 3.14, Table 2, Item 8 | The final rules to not contain this disclosure requirement. |
| Core disclosures – Material Contracts or Agreements | 3.14, Table 2, Item 9 | The final rules to require ‘an overview of’ rather than ‘details of’, contracts, and that contracts 'in the ordinary course of business' to be excluded. |
| Core disclosures – Previous Share Capital Raises | 3.14, Table 2, Item 10 | The final rules to include the added requirement to disclose share class information. |
| Core disclosures – Significant Changes | 3.14, Table 2, Item 12 | The final rules to narrow the requirement to being in relation to the financial position of the PISCES company, and to remove requirements regarding acquisitions, disposals, and significant related party transactions. |
| Core disclosures – Major Shareholders | 3.14, Table 2, Item 13, and 3.16 to 3.18 | The final rules to provide PISCES operators with discretion to set a threshold of up to 25% for identifying major shareholders. Where the chosen threshold is 25%, PISCES operators could require PISCES companies to meet the obligation by disclosing their Companies Act Persons with Significant Control Register. We are also minded that the final rules address the situation when a major shareholder cannot be identified. |
| Core disclosures - Sustainability | 3.14, Table 2, Item 15, and 3.19 to 3.21 | The final rules to not include this disclosure requirement. |
| Core disclosures – Forward Looking Information | 3.14, Table 2, Item 16 | The final rules to not include this disclosure requirement. |
| Core disclosures – Last PISCES Trading Event | 3.14, Table 2, Item 18 | The final rules to more clearly limit the scope of the requirement to the last trading event. |
| Legitimate omissions | 3.40 to 3.42 | The final rules to make this optional for PISCES operators to implement, but to maintain the requirements (where implemented) to identify/explain to investors the reason for any permitted omission and to only omit disclosures where certain conditions are met (such as when disclosure would likely prejudice the legitimate interest of the PISCES company). |
| Corrections | 3.43 to 3.45 | The final rules to more clearly set out that the scope is limited to correcting disclosures during a trading event. |
| Presentation of disclosures | 3.49 to 3.50 | The final rules to not include the requirement for disclosures to be ‘easily analysable, concise and comprehensive’. |
| Post trade event disclosures | 3.51 to 3.52 | The final rules to not include post-trade disclosures on directors’ transactions and major shareholders’ positions. |
| Operator oversight | 3.58 to 3.67 | We are minded to clarify our expectation that PISCES operators should monitor for risks to orderly trading. Our Policy Statement will acknowledge that serious or persistent breaches of disclosure rules by issuers, could be one source of risk to the orderliness of PISCES trading. We will therefore expect operators to have proportionate controls, such as checking the general completeness of disclosures and the ability to follow up investor complaints, while recognising that operators do not possess statutory powers. To remove a potential obstacle to PISCES operators being able to intervene when seeing a threat to orderly trading, please refer to the change we are minded to make regarding complaints procedures & disciplinary arrangements further below. |
| Access to historic disclosures | 3.70 to 3.74 | The final rules to more clearly set out that historic disclosures are only required to be made available from previous open (non-permissioned) trading events. |
| Permissioned trading events | 4.29 to 4.50 | We are minded to more clearly set out that a PISCES company may restrict an intermediary from participating in a trading event – as long as any restriction is based on published, transparent and non-discriminatory rules. |
| Complaints procedures & disciplinary arrangements | 4.106 to 4.118, and 8.24 | The final rules to not apply MAR 5.6A.1R and to instead set guidance that PISCES operators should consider the interests of investors and market integrity when determining whether to postpone, suspend, or terminate a trading event. |
| Application of MAR 5 | 8.8 to 8.26 | The final rules to not apply modified MAR 5.3A.5R(1) for a PISCES operator to temporarily constrain trading if there is a significant price movement in a PISCES share. We will propose to replace this with guidance that, where a PISCES trading system allows intermittent periods of continuous trading, we will expect volatility controls that help ensure fair and orderly trading. We are minded to retain our modified application of MAR 5.3A.11R(1) so that a PISCES operator’s fee structure must be transparent, fair and non-discriminatory, whilst also not to impose further requirements on fee structures. We are also minded to modify our application of MAR 5.5.1R(2) so that PISCES operators are not required to monitor transactions for misleading statements. We are minded to make it clear that it will be more appropriate for PISCES operators to use their complaints process to monitor for misleading statements in relation to disclosures. |
| Right of private action | 8.27 to 8.29 | The final rules to ensure that breaches of rules in PS 2, PS 3 and PS 4 do not give rise to a right of action by a private person under s138D of FSMA 2000. This would align with the position for breaches of rules in MAR 5 as applied by PS 6. |
Pre-application support
We now welcome requests from prospective PISCES operators for us to provide preliminary feedback on proposed operating models and draft rulebooks. This engagement can happen from now onwards, and those interested in operating a PISCES don’t need to wait for our final rules to be published.
Formal feedback will be provided following the review of final documentation submitted as part of a valid application post publication of our final rules.
If you would like to utilise this pre-application support, please contact [email protected].
Prospective PISCES operators who are not yet authorised and need to apply for a new permission (or those who need to vary an existing permission) are also welcome to engage our Authorisations team’s Pre-Application Support Service (PASS) to discuss those applications by contacting us via this webpage.
