Capital markets – regulations establishing PISCES sandbox made

Regulations establishing the Private Intermittent Securities and Capital Exchange System (PISCES) sandbox have been made. The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025 establish the legal framework for PISCES and provide the Financial Conduct Authority (FCA) with powers to make the rules on the implementation and operation of the PISCES sandbox.

PISCES will operate as a marketplace for buyers and sellers of shares in private (i.e. unlisted) companies. It is intended to function as a secondary market only – participating companies will not be able to raise capital using the platform. It will initially operate in a sandbox implemented and regulated by the FCA (to allow the government and the FCA to check that the detailed regulatory requirements are calibrated correctly before considering whether the regime is made permanent). For more detail on PISCES, see our snapshot here.

The Regulations establish PISCES as a platform for the trading of existing private company shares on an intermittent basis. They also cover the: 

• eligibility criteria for entities wishing to operate a PISCES platform, and the requirement to obtain FCA approval to do so;
• type of companies permitted to have their shares traded, being UK companies and overseas companies that do not already have shares admitted to trading on a public market in the UK or overseas;
• categories of investors permitted to participate in a PISCES platform, including certain sophisticated investors and high net worth individuals, as well as other "qualifying individuals" such as employees, consultants, directors and other officers; and
• liability regime for disclosures – a recklessness/dishonesty standard will apply to much of the information, including forward-looking information, disclosed by a participating company, but a stricter negligence standard will apply in relation to disclosures of "core information" mandated by the FCA's rules.

HM Treasury has confirmed in a written statement that employees with shares in Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) contracts can exercise their options on PISCES without losing the tax advantages that these schemes offer. The government has already committed to providing an exemption from Stamp Duty and Stamp Duty Reserve Tax for PISCES transactions.

The Regulations come into force on 5 June 2025 and the government says the FCA will publish its rules underpinning PISCES shortly after that date (see our blog post for details on its consultation on the rules). Entities wishing to operate a PISCES platform will then be able to apply to the FCA for approval, with the first trades taking place possibly as soon as the autumn of this year. The PISCES sandbox will last up to five years, until 5 June 2030.