PISCES: The UK’s new framework for private share trading

PISCES vs IPO

PISCES isn’t a replacement for going public. An IPO means listing on a stock exchange, raising new capital and taking on the ongoing obligations that come with life as a public company.

PISCES does something quite different, offering a controlled way for existing shareholders to trade their shares while the company remains private.

Some think PISCES could be a warm-up for an eventual IPO. Others think it'll encourage companies to stay private even longer.

Either way, they serve different purposes. Here’s how the two compare:

How PISCES works: the company flow

Let’s run through how PISCES works from the company perspective.

Eligibility

Under the FCA framework, both UK and overseas companies can take part, provided they're not already listed on a public market. Otherwise, eligibility will vary between PISCES-approved platforms.

In addition to the general eligibility criteria, an applicant to Vestd PISCES platform* must be able to demonstrate at least one of the following conditions:

1. Transaction condition: a fundraise of at least £2 million (or equivalent), in the past 5 years which may include debt or equity and must have been on an arm’s length basis;

2. Maturity condition: 5 years since incorporation; and

   1. Maturity and Revenue condition: both of the following criteria must be met:

   2. Revenue condition: an annual turnover of at least £5 million (or equivalent) in the applicant’s latest audited financial statements. 

In all cases, an applicant company must have externally audited financial statements.

*Subject to regulatory approval of Vestd as a PISCES operator. The application is ongoing.

Other operators like PSM and JP Jenkins may apply different thresholds, so check with the platform directly. 

Getting governance in order

The FCA's PISCES rules don't prescribe a standard governance model for companies using PISCES. However, platform operators can set their own admission standards under the PISCES Sandbox Regulations 2025, so companies should expect questions about how they're run before they're allowed to take part.

That means having the basics nailed down. A properly constituted board, clear decision-making processes, and documented shareholder rights that are easy to explain.

One area worth looking at early is transfer restrictions. Most private companies have rules in their articles of association (the document that governs how the company operates) about who can buy shares, share transfers, and related matters.

If shares are to be traded during a PISCES auction, the articles may need to be updated in accordance with the proper legal process.

Preparing disclosures

Before each trading event, companies must provide the FCA's “core disclosure information”. That information is shared with permitted participants through the platform’s disclosure arrangements, rather than with the public.

It's simpler than a public listing, but it still covers a fair amount of ground. Under the FCA's final rules, companies should expect to prepare:

• A business overview and management overview

• Financial statements for the past three years (or since the company was set up, if shorter)

• Details of any significant change in the company’s financial position since the latest financial statements

• Capital structure and ownership details – including any employee share schemes and, typically, anyone holding 25% or more of the shares

• An overview of material contracts (not everyday commercial agreements)

• Key risks specific to the company and its shares

• Details of directors' trading intentions ahead of the auction

• Any price limits being applied

There is some flexibility around what gets included. If disclosing something would breach another legal obligation or genuinely harm the company's commercial interests, it can be left out – but the company has to explain why under the FCA's framework.

Choosing an auction type

Under the FCA's rules, companies pick between two formats, though the specifics will vary between operators:

• Open auction: Any eligible investor on the platform can take part. This provides the widest possible reach.

• Permissioned auction: Only investors that the company has specifically approved can participate. So there’s tighter control over who ends up owning shares.

Companies decide the frequency – monthly, quarterly, annually, or on a more occasional basis – and can set price parameters for each event. An independent valuation isn't compulsory, but if a company has obtained one, it must disclose it.

Telling shareholders

Companies should be upfront with shareholders about what joining a PISCES platform means in practice.

How do the trading windows work? Who's allowed to buy? What does the selling process look like?

For employees with share options, the conversation needs to go further. The government has published technical guidance on how PISCES interacts with EMI and CSOP arrangements, including the rules on amending existing option agreements. More on this shortly.

How PISCES works: the investor flow

PISCES isn’t a public market, so access is restricted. Broadly, it’s aimed at professional and institutional investors, certain sophisticated or high-net-worth investors, employees and directors, and some trustees connected with employee share schemes.

Employees and directors are included so they can participate on both sides – selling shares they already hold, and buying more if they choose to.

Access rules

Participation depends on the platform, and each platform can set its own rules within the framework.

How trading works

PISCES trading takes place in scheduled windows rather than on a continuous market.

Companies can decide when trading takes place, who’s allowed to buy, and what price parameters apply to the event. On the PSM, trading takes place through an auction-style process, with bids and offers matched during the event itself.

After the event

Once a trade has settled, the buyer becomes a shareholder in the usual way. But between trading windows, there’s no live market, so shares can't be sold on demand.

That's one of the defining features of PISCES – it creates controlled liquidity at specific moments, rather than continuous trading.

It's also worth knowing that PISCES operates on a "buyer beware" basis. Companies can be held liable if their disclosures are misleading, but beyond that, investors are expected to do their own due diligence before participating.

PISCES and tax

PISCES offers some welcome tax benefits – stamp duty exemption for buyers and the ability to exercise EMI and CSOP options through a PISCES sale.

But it also introduces some new considerations around National Insurance, valuations, and how HMRC classifies shares, especially for companies with employee share schemes.

The key points are:

• Qualifying PISCES trades are exempt from stamp duty and SDRT

• EMI and CSOP options can be structured to work with a PISCES sale

• PISCES trading can affect whether shares are treated as readily convertible assets

• PISCES does not count as a recognised stock exchange for HMRC purposes

As always, tax treatment will vary depending on the circumstances, so companies and individuals should take advice on their own position.

No stamp duty

Ordinarily, buying private company shares in the UK triggers stamp duty at 0.5%, and Stamp Duty Reserve Tax (SDRT) may also apply.

For qualifying PISCES transactions, both charges are waived.

Not a recognised stock exchange

Although PISCES is regulated, HMRC confirmed in ERS Bulletin 59 that it's not a recognised stock exchange for the purposes of section 1005 of the Income Tax Act 2007.

That matters because some tax reliefs – like corporation tax deductions on employee share option gains – may depend on shares being listed on a recognised exchange.

PISCES doesn't meet that test. It also affects how companies answer certain questions in their annual Employment Related Securities returns.

Capital Gains Tax

For sellers, the usual Capital Gains Tax (CGT) rules apply. A sale on PISCES doesn't create a special CGT regime – tax depends on the individual's gains, losses, and available reliefs.

For EMI shares held for at least two years, Business Asset Disposal Relief (formerly called Entrepreneurs' Relief) may reduce the CGT rate.

What PISCES means for share schemes

If your company runs an EMI scheme, a CSOP, or any other kind of share scheme or employee equity strategy, PISCES adds a new dimension.

For the first time, there's a regulated method for employees to exercise their options and sell shares without waiting for another liquidity event or brokering a potentially complex secondary-market sale.

That's a big deal. One of the hardest things about offering equity to employees has always been the "when do I actually see any money?" question. PISCES doesn't guarantee an answer, but it still adds a handy new option.

Why it matters for retention

Equity works best when people can see a path from "I have options" to "I have money in my account."

PISCES won't suit every company, and it won't make private shares as easy to sell as public ones. But it does give you another card to play when you're thinking about how to attract, reward, and retain top talent.

Amending existing schemes

The government has introduced rules allowing existing EMI and CSOP options granted before 6 April 2028 to be amended, on or after 15 May 2025, so they can be exercised for a PISCES sale without losing their tax advantages, provided the statutory conditions are met.

In other words, companies with existing share schemes can retrofit PISCES without starting from scratch. For options granted on or after 6 April 2028, PISCES needs to be written into the terms from the outset.

Where to tread carefully

The government's technical note flags that once a company has arrangements in place for shares to trade on PISCES, HMRC may treat shares issued to employees as readily convertible assets.

That can bring PAYE and National Insurance into play where they didn't apply before, which has cost implications for both the company and the employee.

PISCES can also change the picture surrounding valuations. If shares are being bought and sold at a price on a PISCES platform, it gets harder to argue they deserve the usual discount for being difficult to sell.

For EMI and CSOP grants, where a tax valuation is pivotal to the process, that's worth considering early on.

The bottom line: review your option documents carefully and make sure you're following the legislative requirements to the letter.

PISCES-ready checklist

If your company is considering PISCES, the best preparation is often the same work that makes any shareholding structure easier to manage. 

• Cap table accuracy: Every share, option, and share class needs to be properly recorded and reconciled. The FCA requires core disclosure information as standard, and operators can request additional information on top.

• Financial information: Companies using PISCES must provide financial statements for the last three years (or since incorporation, if less). The FCA doesn't impose a blanket audit requirement, but some operators set their financial thresholds by reference to audited accounts. 

• Share class clarity: Be clear about the rights attached to each class of share – voting rights, dividend rights, transfer rights, and any special protections or restrictions. If those rights are hard to explain, that's usually a sign the paperwork needs attention.

• Articles and shareholder agreements: Review your constitutional documents early. Transfer restrictions, pre-emption rights, consent requirements, and other limitations may all need to be reviewed before a trading event can proceed smoothly. This is one area where legal advice is particularly valuable.

• Governance: The FCA doesn't prescribe a single governance model for PISCES companies, but operators can set their own admission stanards. In practice, companies should expect to show that decision-making is properly documented and governance is in good order. 

• Disclosure readiness: Before each trading event, companies must provide core disclosure information, including financial data, ownership details, key risks, and other material information. Companies that already keep this in good shape will find the process much easier.

• Share scheme review: If you run EMI, CSOP, or other schemes, review the documents early. New grants should be drafted with PISCES in mind, where relevant. Existing EMI and CSOP contracts granted before 6 April 2028 can be amended from 15 May 2025 to allow exercise for a PISCES sale without losing tax advantages, provided the statutory conditions are met.

• Electronic settlement: Shares must be capable of electronic settlement through an approved settlement system. That's a platform requirement rather than a universal feature of every PISCES venue, but it's an important practical point for companies using that route.

These are exactly the kinds of foundations we help companies build – from cap table management to share scheme administration to valuations that stand up to scrutiny.