PISCES (Private Intermittent Securities and Capital Exchange System), a new UK platform that allows private companies to trade their securities in a controlled environment on an intermittent basis, is due to go live in the first quarter of next year as part of the country’s attempt to encourage more listings and boost equity trading volumes.

Julia Hoggett, chief executive of the London Stock Exchange plc and chair of the UK capital markets industry taskforce, said the growth of private markets is here to stay.

“The London Stock Exchange is the first to say that we are indifferent as to whether a company is public or private,” she added. “Our job is to bring capital and companies together at every stage of their life so they have a predictable funding mechanism.”

Hoggett spoke at the Bloomberg Liquidity in Transition conference in London on 21 March.

In March this year the UK government launched a consultation for PISCES that closes on 17 April 2024. The proposal for the new platform is to allow private companies to trade their securities in a controlled environment and on an intermittent basis by incorporating elements from public markets, such as multilateral trading, and elements from private markets that provide greater discretion on company disclosures.

The government said participating in PISCES will support companies to scale up and grow, providing liquidity, helping shareholders, including employee shareholders, to realise their gains, and providing an opportunity to companies to rationalise their shareholder base.

“Investors will gain better access to exciting companies while also benefiting from greater transparency and efficiency than available in private markets,” said the Treasury. “This proposal will support the pipeline for future initial public offerings in the UK, by improving the interface between private companies and UK public markets, and complementing the government’s wide ranging and ongoing reforms to boost the UK as a listing destination.”

The government said it expects that all existing trading venue operators would be eligible to apply to operate PISCES.

Hoggett said the regulation for PISCES should be in place by the end of this year and it should be in operation in a sandbox in the first quarter of 2025 .

The UK capital markets industry task force includes chief executives, chairs and industry leaders representing private and publicly listed companies, asset owners and managers, and the advisory services that support access to capital and investments.

The task force has a ‘five fingers and a glove’ approach according to Hoggett. The five fingers are increasing the quality of primary and secondary markets, increasing research, increasing risk capital while recognising there will be losses, improving corporate governance and building an ecosystem to scale private companies.

For research, Hoggett said the taskforce has a roadmap to reactivate the buy-side and provide banks with a good economic rationale to increase coverage.

To increase risk capital, Hoggett said there needs to be a consolidation of pension schemes and regulation should focus on the net returns, rather than just the cost. The UK government should also provide tax credits for investing in UK companies.

“Investors have to pay stamp duty if they buy Aston Martin, but not Tesla,” added Hoggett.

The glove that encompasses these five fingers is increased retail participation and fostering a 401k culture, such as in the US.

“We have not changed the primary listing rules for 40 years and the process for retail has not changed,” said Hoggett.

As a result, it is easier for retail investors to buy unregulated assets than regulated assets.

Hoggett said: “I am optimistic that 2024 will be seen as the year that moved the dual for IPOs and the enfranchisement of retail investors.”

Law firm Taylor Wessing said in a blog that it welcomed the PISCES consultation, which maintains the momentum to establish a UK trading venue to promote liquidity in private capital.

“The plans appear flexible and pragmatic, but there are clearly some challenges around levels of disclosure, confidentiality and the free transferability of shares which ought to be considered further to maximise the potential for an intermittent listing on PISCES to be an attractive option for private companies,” added Taylor Wessing. “As we noted previously, with the UK’s 34,000 strong scale-up community, generating over £1 trillion of turnover a year, there is a definite potential audience.”