PISCES and UK Capital Markets: A Regulatory Innovation

Introduction:

The founder of a leading British fintech recently met with the Head of Investment Banking at a global bank to discuss an initial public offering (IPO). The conversation was conducted entirely on the assumption of a U.S. listing, hence, when the founder raised the possibility of listing in London, he was met with laughter. This anecdote by Barney Hussey-Yeo, founder and CEO of Cleo, encapsulates the structural challenge facing UK capital markets: a persistent perception of decline, and the loss of domestic high-growth companies to foreign stock exchanges.

This crisis of confidence is reflected in data showing a prolonged listings drought, with the number of UK IPOs falling sharply over the past decade. The Capital Markets Industry Taskforce (CMIT), regulators and policymakers have responded with a suite of reforms aimed at reinvigorating UK capital markets. Within this context, the introduction of PISCES stands out as one of the most ambitious and potentially transformative initiatives.

With HM Treasury launching a Call for Evidence in March 2024 and the FCA approving the first operator in August 2025, PISCES is designed to create a regulated ‘private plus’ market. This means that, for the first time, private companies will be able to access intermittent liquidity through auctions operated by the London Stock Exchange, while retaining their private status. By allowing private companies to go public for a day while remaining private under the Companies Act, PISCES offers the possibility of bridging a longstanding gap in the UK’s funding continuum. 

This article explains the mechanics of the regime, considers its policy rationale, and assesses its potential benefits and risks. It argues that PISCES could become a crucial bridge between private and public markets, but that its long-term success will depend on effective implementation, market uptake, and integration within the broader reform agenda designed to restore London’s global competitiveness.

I. What is PISCES?

Essentially, PISCES enables private companies to schedule intermittent auction events on the London Stock Exchange’s FCA-mandated newly created Private Securities Market. These auctions will rely on the same technological and institutional infrastructure that underpins London’s public markets, including the Exchange’s Disclosure Portal, its clearing and settlement systems, and its network of authorised intermediaries. 

PISCES facilitates secondary trading only in existing shares and companies retain discretion over auction timing. They may choose to provide additional information, but must meet minimum disclosure requirements, supplemented where necessary by operator rules. Investors, by contrast, must satisfy statutory eligibility criteria, ensuring that only professional and sophisticated participants, together with employees admitted under company share schemes, can participate via authorised intermediaries.

PISCES has also been reinforced by targeted fiscal reforms. In the March 2025 Spring Statement, the UK Government confirmed that transactions conducted on PISCES would be exempt from stamp duty, thereby reducing costs and signalling official support for the initiative. In May 2025, Ministers went further, announcing that existing Enterprise Management Incentive and Company Share Option Plan schemes could be amended so that options exercised and sold on PISCES venues would retain their tax-advantaged status. These reforms are intended not only to incentivise participation but to integrate PISCES within the wider policy effort to mobilise domestic capital and encourage equity investment in high-growth companies.

II. Policy Rationale

The central policy rationale for PISCES is to address the structural funding gap between late-stage private finance and the public markets. The regime is intended to create, for the first time, a genuine funding continuum across the spectrum of capital formation.

This gap has long been a weakness of the UK capital market. Early-stage companies benefit from tax-advantaged schemes such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs). At the other end, mature companies can raise capital through an IPO. Yet, the ‘middle ground’ consisting of scaling businesses in need of liquidity but unwilling or unsuited to a continuous listing, has remained under-served. PISCES is designed to fill that space.

PISCES also dovetails with the Mansion House agenda, which aims to mobilise long-term pension and insurance capital into productive investment. By establishing a regulated framework for institutional investors to engage with private companies, PISCES creates a channel through which this capital can be deployed without subjecting companies to the burdens of permanent public disclosure.

Finally, PISCES is explicitly positioned within the UK’s competitiveness strategy. By approving the London Stock Exchange as the first operator, the FCA described the launch as “a major milestone in our drive to boost growth and unlock capital investment.” It is thus both a market innovation and a symbolic demonstration of the UK’s intent to reassert its status as a global financial centre.

III. Advantages of PISCES

PISCES offers potential benefits for both companies and their investors, reflecting its dual aim of easing liquidity constraints and strengthening the UK’s capital formation ecosystem.

For companies, PISCES offers several advantages. Firstly, participation in intermittent auctions enables an evolution of the shareholder register that can be better aligned with a company’s long-term strategic vision. Secondly, the efficiency and reach of the London Stock Exchange’s infrastructure should lower the costs associated with providing liquidity to existing investors, while the periodic nature of disclosure requirements may reduce the administrative burden that deters many private companies from pursuing a full listing. Thirdly, by engaging gradually with disclosure and governance standards, companies can build familiarity with public market expectations in a more measured way. Finally, PISCES also has implications for workforce incentivisation: by providing a regulated venue for the sale of employee share options, PISCES may enhance the attractiveness and effectiveness of equity-based remuneration schemes.

For investors, PISCES can widen access to high-growth private companies that would otherwise be difficult to approach. New institutional investors may be able to participate in a segment of the market typically reserved for venture capital or private equity funds. Meanwhile early shareholders will gain a structured opportunity to reduce their positions and recycle capital into new ventures. Most importantly, employees eligible through share plans will be given the opportunity to realise the value of their shareholdings in a regulated and tax-efficient environment.

Taken together, these advantages illustrate that PISCES has the potential to deepen liquidity, broaden participation, and reinforce the UK’s ambition to develop a more flexible and competitive capital market.

IV. Risks and Challenges

There are many potential benefits of PISCES, however, each of these advantages carries a corresponding challenge. 

Shareholder Evolution 

While PISCES offers companies the ability to reshape their shareholder register in line with strategic objectives, this could become a substitute for full listings. This may delay or avoid IPOs, as companies become satisfied with intermittent liquidity sufficient. Thus, rather than strengthening the capital formation continuum, PISCES could fragment the market and weaken the pipeline of fully listed companies.

Efficiency and Cost Reduction

The London Stock Exchange’s infrastructure should, in principle, deliver efficient liquidity. Yet intermittent trading windows may produce shallow order books and weak price discovery. Instead of lowering costs, this could create volatility and unreliable valuations, making it more difficult for companies to raise capital in subsequent rounds.

Market Perception

Innovation in market structures is not always rewarded. The U.S. SPAC boom of 2020-21 demonstrates how an instrument initially lauded as flexible and investor-friendly can, under conditions of overuse and underperformance, become associated with opacity and failure. 

V. Policy Implications and the Road Ahead

The introduction of PISCES represents a bold experiment in rethinking how capital markets can better serve scaling companies, their investors, and the wider economy. By enabling private companies to access regulated liquidity through intermittent auctions, it challenges the binary choice between remaining private or undertaking a full IPO. In doing so, it creates a new rung in the funding ladder that the UK has been missing.

The potential is considerable. If implemented effectively, PISCES could deepen liquidity, broaden participation, and re-establish London as a venue for genuine innovation. It offers companies a mechanism to evolve their shareholder registers in line with strategic growth, investors structured access to high-growth assets, and gives employees the opportunity to realise the value of their contributions.

Nonetheless, no reform can succeed in isolation. The real test for PISCES will be its ability to  integrate into the wider capital market reform agenda effectively, and whether it succeeds in attracting the companies and investors who have drifted towards private capital. If PISCES is seen as a bridge to IPOs rather than a substitute, it has the potential to strengthen the capital formation pipeline rather than weaken it.

In this light, PISCES should be viewed as a globally distinctive innovation. It signals that the UK is prepared to take regulatory risk in pursuit of competitiveness. PISCES will operate initially within a regulatory sandbox, allowing refinement before any permanent model is established. Whether it becomes the catalyst for restoring confidence in London’s markets remains to be seen, its ambition and novelty still mark PISCES as one of the most consequential capital markets reforms in a generation.