The UK has proposed a framework for the Private Intermittent Securities and Capital Exchange System (PISCES), which was mentioned in today’s Spring Budget delivered by the Chancellor of the Exchequer, Jeremy Hunt.
The consultation aims to establish new parameters to enable private securities to trade periodically.
While regulated exchanges are effective for larger firms, the lower degree of liquidity creates a challenge for private securities trading. Some crowdfunding platforms, like Seedrs, have established in-house solutions, but the UK government seeks to establish a central repository for trading these securities.
The consultation announcement explains that PISCES will attempt to create an environment where companies may “scale up and grow, providing liquidity, helping shareholders, including employee shareholders, to realize their gains, and providing an opportunity for companies to rationalize their shareholder base.”
The struggling IPO market has been a focal point for policymakers, and PISCES will be designed to establish a pipeline for future initial public offerings.
PISCES is also expected to boost the UK as a listing destination for firms based elsewhere.
Globacap is a company that may participate in the private securities trading solution. Myles Milston, co-founder and CEO of Globacap, shared the following perspective on the PISCES initiative.
“Even with the introduction of PISCES, the UK is still playing catch-up. The US’ alternative trading system (ATS) framework has been in place since 1998 and has seen some real growth and success over the past couple of decades, leading to deep and liquid private markets. Some may call for continuous trading in addition to intermittent which would align with the US but this isn’t worthwhile for the vast majority of private entities as few have enough liquidity demand for this to work. Even in public markets most listed entities don’t have enough liquidity to support continuous trading.”
Milston said PISCES is a good step forward for the UK as private firms will be able to access capital as well as liquidity while avoiding the cost and complexity of becoming a public firm.
“With the public consultation to start shortly, there is still a long way to go before the legislation is finalised and available. But, if it’s deployed in the right way it could be a real catalyst for the UK’s private markets ecosystem.”
The Consultation on PISCES is available here.
Responses to this consultation should be sent to PISCES@hmtreasury.gov.uk by April 17, 2024.