Key takeaways
PISCES Sandbox Opens Liquidity for Private Firms
Structured secondary trading offers investors and employees new exit routes.
Five-Year Pilot to Shape Future Regulation
FMI powers allow review before permanent market adoption.
Access Limited to Qualified Investors
Professional clients and high-net-worth individuals dominate participation.
As part of the government’s overall proposals to make the UK a more attractive destination for growth companies, it has recently published regulations establishing the Private Intermittent Securities and Capital Exchange System Sandbox (PISCES Sandbox).
In this article we consider some of the key features of the PISCES Sandbox and in particular how it may increase liquidity in private companies and allow early-stage investors and employee shareholders an opportunity to realise their investments.
What is the PISCES Sandbox?
The PISCES Sandbox is a multilateral system allowing for an intermittent trading of shares.
It is intended to provide an avenue for private companies to raise capital via secondary trading, as well as a first step to listing on public markets. According to the Treasury, the private market is growing but there are limited ways in which investors can invest in private companies or realise their gains. As a result, private companies have more restricted access to capital. The PISCES Sandbox aims to change this by facilitating investments in private markets in a structured way.
Why is it a Sandbox?
The Treasury is using the Financial Market Infrastructure (FMI) powers contained in the Financial Services and Markets Act 2023 to establish a new stock market. The FMI allows the government to regularly review the workings of the PISCES platforms and consider any changes before the PISCES platforms become permanent. PISCES is established for five years (until June 2030) and at the end of this period, the government will fully review the regulatory framework.
What are the key features of the PISCES Sandbox?
The key features of the PISCES Sandbox are as follows:
it is a secondary market, which does not allow for offerings of new shares
both private and public companies can trade their shares provided none of their shares are admitted to trading on a public market (either in the UK or overseas)
both UK and overseas companies can trade their shares
PISCES platform operators will be able to set rules for their platforms (subject to the FCA’s rules as well)
companies will be able to decide (subject to the FCA’s rules and the rules of any PISCES platforms):
when and how often to trade their shares
who can buy their shares and at what price
companies will not be allowed to buy back their own shares on a platform
In addition, companies trading their shares on a PISCES platform, will need to make “core disclosures” with respect to their business in advance of a trading event. This will include financial information, directors’ transactions, overview of material contracts, share class information and information on major shareholders. Our understanding is that the intention is not to create a disclosure standard akin to that applicable to a publicly listed company, but rather to ensure that sufficient disclosures are included on core information to enable an investment decision to be made.
Who can operate a PISCES platform?
Only firms established in the UK can apply to the FCA to be a PISCES platform operator and they must be either a recognised investment exchange or a person with permission to carry on a regulated activity under the Financial Services and Markets Act 2000. Such regulated activities include arranging deals in investments, operating a multilateral trading facility and operating an organised trading facility.
The FCA has the power to decide whether a firm’s application to be a PISCES platform operator has been successful or not and whether any conditions, limitations or restrictions are attached to the application.
Most notably, the London Stock Exchange has been heavily involved in the process to establish the PISCES Sandbox and plans to launch its “Private Securities Market” later in the year and become a PISCES market operator. This new market will, in the LSE’s own words, “be the world’s first regulated crossover market – a hybrid – providing private companies with periodic liquidity whilst leveraging our public market-grade infrastructure”.
Who will be able to buy shares on a PISCES platform?
As investment in private companies carries risk, there will be restrictions on who can trade in PISCES shares. The regulations have attempted to strike a balance between restricting who can invest and attracting a variety of investors. The following investors (among others), being “specified PISCES investors” can participate in the PISCES shares:
professional clients
high net worth individuals
self-certified sophisticated investors
high net worth companies and unincorporated associations
certain employees or consultants of participating companies
When did the PISCES Regulations come into force?
The Regulations came into force on 5 June 2025.
Conclusion
The introduction of the PISCES Sandbox provides private companies with an opportunity to offer their investors (including employee shareholders) the ability to trade their shares with other interested investors without having to wait until an IPO or an exit. It also provides investors an opportunity to acquire shares in private companies that would ordinarily be difficult to obtain. Importantly, the PISCES Sandbox is not intended to be a competitor to junior markets such as AIM or Aquis and ultimately seeks to encourage companies to stay and grow in the UK.
