The UK government's launch of the PISCES trading platform signals a potential turning point for private companies, particularly those navigating the longstanding challenge of shareholder liquidity.
For employees and early investors, the inability to realise value from shares in unlisted companies has often been a sticking point, especially as IPOs and trade sales become less frequent. The Private Intermittence Securities and Capital Exchange System (PISCES) aims to change that.
The new PISCES framework introduces regulated, intermittent trading windows during which qualifying private companies can permit shareholders to offer their shares for sale on the PISCES platform to a restricted group of investors. Companies will set their own terms on pricing, disclosures, and who can participate, allowing them to retain control while providing liquidity.
The tax trap for EMI schemes and CSOPs – now addressed
For companies using tax-advantaged employee share option schemes like EMI and CSOP, the PISCES model initially raised a conundrum. Would tweaking share scheme rules to allow participation in PISCES trigger a "regrant" under HMRC rules, potentially disqualifying tax benefits?
Thankfully, the government has answered that with a resounding "no." Legislative changes will allow existing EMI and CSOP options to be amended so that employees can exercise them on a PISCES trading event without losing their tax -advantaged status. This is a crucial development that removes a major roadblock to potential wider uptake of shares by employees, and Finance Bill amendments are expected to support this change retrospectively.
What employers should be doing now
Answers to many questions around how the PISCES platform is going to work, and therefore how useful PISCES will be in practice in relation to both employee share schemes and more broadly, are still unknown at this time, and employers are generally recommended to sit tight and wait until the platform is developed and further guidance emerges in the coming months before taking any actions.
Even once clarity emerges around use of the platform, employers are advised not to rush into making any changes to their employee share schemes without carefully considering the desirability and viability of using PISCES in connection with their employee share schemes – for example, is it desirable for employees to be able to liquidate all of their shares at this time in the first place, in effect taking away lock-in?
Employers will also need to work through the legal, tax and practical issues that arise if they were to change their schemes to permit exercise in connection with a PISCES trading window (or multiple PISCES trading windows) – for example, are sufficient arrangements in place to deal with employees exercising their options and acquiring shares, but not being able to immediately sell their shares on PISCES? Although PISCES will be a trading platform, it will not guarantee that a ready buyer for the shares will be available. Amendments to the company's articles may be advised to address the scenario in which employees hold shares (rather than options).
Uncertainties remain for now
While PISCES has been welcomed by many as a long overdue liquidity mechanism for private equity, it is not without its sceptics. The enabling legislation is deliberately light touch, a move intended to encourage innovation but which some fear may leave room for misuse.
The platform itself is still in development. Detailed rules from the Financial Conduct Authority (FCA) are expected by late June 2025, including eligibility criteria for companies and the standards required to obtain a PISCES Approval Notice. Until these rules are published, there is uncertainty around how tightly the system will be governed.
Lawyers and compliance teams should keep a close eye on FCA guidance as it emerges, particularly given warnings from some quarters that without the right controls, PISCES risks becoming a "fraudsters charter."
What comes next?
Here is what to watch over the coming months:
- FCA rulebook: Operational details on platform oversight, trading controls, and investor protections will shape how PISCES functions in practice
- Finance Bill follow up: Final provisions confirming retrospective protection for amended options
- Market adoption: Will companies embrace the platform? Much depends on how user friendly and trusted the final regime proves to be
If successful, PISCES could reshape the private company ecosystem. Where it can improve liquidity, it may enhance employee incentivisation, attract new investors, and offer an alternative route to value realisation that does not depend on a traditional exit. But the road ahead requires careful navigation, particularly for those balancing employee expectations with broader commercial considerations and compliance, and for now this remains a watch and wait.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
