Market News

By Aisha S Gani

(Bloomberg) -- A UK regulator said a new framework for private company share sales will create “more of a ‘buyer beware’ market” than a traditional stock exchange, with higher risks of insider trading. 

The Financial Conduct Authority said it will monitor the potential for market abuse as it develops the Private Intermittent Securities and Capital Exchange System, or Pisces. Only institutions and professional investors will be able to use the new system, and the operators are still to be confirmed. 

Pisces is intended to let private companies open trading windows for employees and early investors to sell stock. Demand for this type of sale has rocketed as startup companies delay stock market listings, meaning shareholders are waiting years to exit. 

Unlike firms listed on the stock market, companies selling via Pisces won’t need to publish regular earnings, leaving open the risk that inside information could be used when trading. The FCA said it will ensure investors are informed of the risks. 

“Next year we will ring the bell on a new private stock market that could transform how private companies access funds and grow,” Simon Walls, interim executive director of markets at the FCA, said in a statement alongside the regulator’s latest consultation on how Pisces will work. It plans to publish its rules in May 2025.  

In recent months, early investors and employees of Revolut have offloaded $1 billion worth of their holdings, while Monzo has also held a secondary event to provide liquidity for staff. Trades like this are currently carried out on platforms such as Crowdcube or managed by an investment bank. 

Proposals for a new trading option for shares before they go public could act as a “stepping stone” to full stock market listings, City Minister Tulip Siddiq said in a recent interview with Bloomberg News.

Pisces is one part of a wider overhaul to London’s capital markets to restart activity following the worst year for IPOs in the UK since the 2008 financial crisis. The Labour government has vowed to prioritize economic growth and reverse what it sees as over-regulation of the finance industry.