PISCES: A Game-Changer for Private Market Liquidity and Capital Formation in the UK

The UK's introduction of the Private Intermittent Securities and Capital Exchange System (PISCES) marks a pivotal shift in the capital markets landscape, offering a regulated, scalable solution to address the long-standing liquidity challenges in private equity. Launched in late 2025 under a five-year regulatory sandbox, PISCES is designed to bridge the gap between private and public markets by enabling controlled, intermittent trading of shares in private companies. For investors and private firms alike, this platform represents a strategic opportunity to rethink capital strategies, diversify portfolios, and unlock value without the complexities of a traditional IPO.

Bridging the Liquidity Gap

Private companies have historically struggled to provide liquidity to shareholders, particularly employees and early-stage investors, who often hold illiquid equity as part of their compensation or investment. PISCES addresses this by allowing companies to schedule intermittent trading events—quarterly, annual, or one-off windows—where existing shares can be bought and sold in a structured, FCA-regulated environment. Unlike public markets, companies retain control over pricing parameters, participant eligibility, and trading frequency, ensuring alignment with their strategic goals.

For example, a tech startup in the life sciences sector could use PISCES to offer quarterly trading windows for employees to sell vested shares, improving retention while avoiding the scrutiny of a public listing. Meanwhile, institutional investors gain access to a diversified pool of high-growth opportunities, with standardized disclosures and auction mechanisms reducing execution risks.

Strategic Implications for Investors

PISCES introduces a regulated framework that enhances transparency and reduces the information asymmetry often seen in private markets. Investors, including UK pension funds, family offices, and high-net-worth individuals, can now access a broader universe of private companies with confidence. The platform's integration with tax-advantaged employee share schemes (e.g., Enterprise Management Incentives) further strengthens its appeal, as it allows employees to monetize equity without losing tax benefits.

For institutional investors, PISCES aligns with the Mansion House Accord mandate to allocate 10% of defined contribution pension schemes to unlisted equities by 2030. By providing a scalable, FCA-backed platform, PISCES enables pension funds to diversify into private markets while adhering to regulatory standards. The exemption from stamp duty and the use of dematerialized settlement via the LSE's CREST system also streamline transactions, making private equity more accessible.

However, investors must remain cautious. While PISCES offers structured disclosures, the intermittent nature of trading events means liquidity may not be as immediate as in public markets. For instance, a company with limited trading volume might see prices fluctuate unpredictably between events. Investors should conduct due diligence on the company's financial health and governance practices, as PISCES does not guarantee price stability.

Strategic Implications for Private Companies

For private companies, PISCES offers a strategic tool to manage shareholder expectations and attract talent. By enabling periodic liquidity events, companies can retain control over their capital structure while providing value to early investors and employees. This is particularly valuable in sectors like AI and clean energy, where long-term growth is prioritized over short-term exits.

Consider a UK-based fintech firm that uses PISCES to allow employees to sell shares annually. This not only improves retention but also signals to the market that the company is mature enough to support structured liquidity. Additionally, the platform's flexibility allows companies to restrict trading to specific investor categories (e.g., excluding competitors), protecting commercial interests.

Yet, companies must navigate governance challenges. Amending articles of association to allow free share transfers during trading windows could trigger tax implications for employees or shareholders. Furthermore, PISCES does not facilitate capital raising, so growth-stage firms seeking funding will still rely on traditional mechanisms like venture capital or private equity.

A New Era for Capital Formation

PISCES is more than a liquidity tool—it is a catalyst for long-term capital formation in the UK. By creating a regulated secondary market, it encourages private companies to scale without the pressure of premature public listings, fostering innovation in sectors critical to the UK's economic future. For investors, it opens a new asset class with the potential for high returns, provided they adopt a patient, strategic approach.

Investment Advice and Outlook

For investors, PISCES presents an opportunity to diversify portfolios with high-growth private assets while mitigating risks through structured disclosures. Early engagement with the platform—particularly in sectors aligned with the UK's strategic priorities—could yield significant rewards. However, due diligence remains paramount. Investors should prioritize companies with strong governance, transparent financials, and a clear path to growth.

For private companies, the key is to leverage PISCES as part of a broader capital strategy. By offering periodic liquidity, firms can attract and retain top talent, enhance shareholder value, and position themselves as market leaders. As the platform evolves, companies that adapt quickly to its framework will gain a competitive edge.

In conclusion, PISCES is a transformative initiative that redefines the relationship between private and public markets. By providing a regulated, scalable solution for liquidity, it empowers investors and companies to navigate the complexities of modern capital formation with confidence. As the UK's financial ecosystem continues to evolve, PISCES stands as a testament to the power of innovation in bridging gaps and unlocking value.