UK government launches consultation on proposed new regulated crossover market

The platform would allow companies to trade their securities in a controlled environment

UK government launches consultation on proposed new regulated crossover market

The UK Chancellor recently introduced a consultation on a proposed new regulated crossover market, the Private Intermittent Securities and Capital Exchange System (PISCES) as part of the Spring Budget.

His Majesty’s Treasury announced the initiative, seeking industry feedback on the proposed regulated crossover market that would enable private companies to intermittently trade their securities in a controlled environment, thereby temporarily accessing the public market.

PISCES is designed to operate as a secondary market platform, focusing solely on trading existing shares of private companies during specified trading windows. This model restricts the platform's use for primary fundraising activities, such as issuing new shares or trading other securities like bonds or exchange-traded funds.

The primary goal of PISCES is to enhance private companies' access to UK capital markets at earlier stages of growth, potentially enriching the future pipeline of Initial Public Offerings (IPOs) in the UK. Additionally, the platform aims to allow existing shareholders of private companies to realize gains and provide institutional investors with earlier access to private markets, promising increased transparency and efficiency.

The regulatory framework for PISCES will utilize the Financial Conduct Authority's (FCA) financial markets infrastructure (FMI) sandbox, established under the Financial Services and Markets Act 2023. Interested firms, including existing trading venue operators, must apply to the FCA for authorization to run intermittent trading events.

The sandbox phase, expected to launch at the end of 2024, will act as a trial period for refining the platform's regulatory regime. During this phase, only shares in companies not listed on public markets will be eligible for trading on PISCES, with certain restrictions on investor categories to mitigate risk, particularly for retail investors.

The consultation period set by HM Treasury for industry feedback on PISCES closes on April 17. Following this, HM Treasury plans to introduce a statutory instrument to Parliament to establish the legal framework for the sandbox, with the Financial Conduct Authority (FCA) also expected to consult on the operational processes and rules for firms participating in the sandbox.

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