The UK government said in its budget on 6 March that the UK’s capital markets play a key role in the economy, allocating capital and facilitating investment for growth and job creation.:

“The government is already implementing reforms to boost the UK’s competitiveness via the Lord Hill UK Listing Review and the Chancellor’s Edinburgh and Mansion House reforms

Spring Budget builds on those policies and the measures announced at Autumn Statement 2023, to channel more capital into equity markets in the UK and improve the competitiveness of the UK as a listing destination. The government also continues to work with regulators and industry to ensure the UK’s corporate governance environment is supporting sustainable growth.

As part of these reforms, the government is consulting on the Private Intermittent Securities and Capital Exchange System (PISCES), a new innovative market that will allow private companies to scale and grow, and will boost the pipeline of future IPOs in the UK.”

Following publication of the UK Government’s proposed framework for the Private Intermittent Securities and Capital Exchange System (PISCES) as announced in today’s Spring Budget, David Schwimmer, CEO, LSEG, said: pic.twitter.com/S9cOB9jCCE

— LSEG (London Stock Exchange Group) (@LSEGplc) March 6, 2024

Navina Rajan, Senior EMEA private capital analyst at data provider PitchBook, said in an email:

“Pisces trading venues are aimed to run on traditional exchanges, so for instance the LSE can apply for permission to run Pisces. Whilst this in theory would allow quicker and more transactions to occur regarding share the sale of private shares, the scope of the reforms seem limited in helping increase activity on the London Stock Exchange. The number of days such share sales take place and the uptake of said trading venues will determine how impactful the new regime will be. In a market where exits are significantly muted and liquidity is weak, such reforms appear to be targeting a solution to this. However no new capital for such companies will be raised through Pisces and retail investors are not eligible to participate, bringing into question how meaningful the impact will be for liquidity on the LSE.”

Myles Milston, private markets specialist and co-founder and chief executive of capital markets tech firm Globacap, said in an email:

“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.

The PISCES legislation is a good step forward for the UK as it will enable private companies to access the funding and liquidity they need while avoiding the complexity and expense of going public. 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.”

Janine Hirt, chief executive of Innovate Finance, said in an email:

“In the week we launched our Unicorn Council for UK FinTech to advise government on policies to maintain the UK’s leading position as a hub for investment and innovation, we are pleased to see the Chancellor unveil further measures to strengthen investment. The UKGB ISA, a regulatory review of barriers to pension fund investment in UK equities, and new disclosure requirements should all contribute to enabling British savers to reap the returns of UK FinTech investment and support more home-grown unicorns.

“Many of the other measures FinTechs need to strengthen UK competitiveness are regulatory rather than fiscal  – so whilst they did not feature in the Budget we will be looking for progress in the coming weeks. These include proportionate Basel 3.1 capital requirements for challenger banks, avoiding gold plating that will stymie lending to small firms; giving regulators the legal powers to introduce a cryptoasset and stablecoin regime that protects consumers and supports innovation, and the building blocks for evolving open banking in the UK and extending it to more financial datasets that stimulate growth and financial well being.”