Momentum has started to build in the establishment of the new Private Intermittent Securities and Capital Exchange System (PISCES), with confirmation that the legislation establishing the PISCES ‘sandbox’ will come into force on 5 June 2025 and recent guidance from HMRC on how PISCES trading events will interact with discretionary tax advantaged share schemes.
PISCES is the framework for a new type of trading platform that will enable intermittent trading of private company shares. The Government hopes that the initiative will ‘boost the growth companies of the future and support the UK’s IPO pipeline’.
PISCES sandbox legislation: The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations, SI 2025/583 (‘PISCES regulations’) were laid before Parliament on 15 May 2025 and will come into force on 5 June 2025.
The PISCES regulations establish a ‘sandbox’, in which the FCA will make rules to implement the PISCES framework, including for example the disclosure requirements that will apply to PISCES companies and how trading events will be organised and run.
The regulations broadly reflect the draft on which HM Treasury consulted from November last year. They confirm that in order to be sold on a PISCES market, shares will need to be freely transferable and not have been admitted to trading on a public market in the UK or abroad. A company with multiple classes of shares will be able to determine which of the share classes may be auctioned during the PISCES trading windows. It will be possible to retain a class of non-transferrable shares that may not be sold on a PISCES platform.
The PISCES regulations make some changes to the list of persons who may participate in the PISCES sandbox. In line with the original proposal, most retail investors are prohibited from trading, but professional clients, sophisticated investors and high net-worth investors and employee benefit trustees will be eligible to trade. Employees or officers of PISCES companies (or other companies in the same group) will also be eligible and in an expansion of the investor definitions, so will those providing consultancy and managerial services to PISCES companies and their group companies.
The Government had already confirmed that buybacks will not be permitted on PISCES markets, although this may be explored at a later stage. The PISCES regulations now make clear that a financial intermediary must not place an order for a PISCES company if the effect of that order would be that the PISCES company buys or sells its own PISCES shares.
HMRC technical note on PISCES tax implications: It had already been confirmed that PISCES transactions will be exempt from stamp duty and SDRT (in line with the existing AIM exemption).
HMRC have now published a technical note providing guidance as to how PISCES trading events will interact with discretionary tax advantaged share schemes. A PISCES trading window can be an exercise event for new Enterprise Management Incentives (EMI) and company share option plan (CSOP) options, although specific wording will be needed in plan documents to permit this.
On 15 May 2025, the Government published a written statement confirming that it will include legislation in the next Finance Bill which will also permit existing EMI and CSOP options to be amended to include admission to trading on PISCES as an exercise trigger without adversely impacting the tax-advantaged status of the options. Companies will need to make amendments to the subsisting award agreements but such changes should not be made until the new legislation is available.
There are other tax implications to consider if a company is considering lifting or varying any share restrictions (including in relation to voluntary transfers) that apply to a class of shares that are held by officers or employees. In order to mitigate the risk of an unwelcome employer’s NIC charge, advice on this issue should therefore be factored into any transaction readiness advice when considering the use of any PISCES platform.
Next steps: We await the final version of the FCA’s rules for PISCES. An interim update published in April gave us some hints as to the results of the FCA’s consultation, including a lighter disclosure burden for PISCES companies than originally envisaged.
The PISCES sandbox will run until 5 June 2030, although it may be extended by the Government if necessary. The Treasury hopes that the first PISCES trading events will take place before the end of this year.
Nicholas McVeigh & Arthur Horsfall, Mishcon de Reya
Momentum has started to build in the establishment of the new Private Intermittent Securities and Capital Exchange System (PISCES), with confirmation that the legislation establishing the PISCES ‘sandbox’ will come into force on 5 June 2025 and recent guidance from HMRC on how PISCES trading events will interact with discretionary tax advantaged share schemes.
PISCES is the framework for a new type of trading platform that will enable intermittent trading of private company shares. The Government hopes that the initiative will ‘boost the growth companies of the future and support the UK’s IPO pipeline’.
PISCES sandbox legislation: The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations, SI 2025/583 (‘PISCES regulations’) were laid before Parliament on 15 May 2025 and will come into force on 5 June 2025.
The PISCES regulations establish a ‘sandbox’, in which the FCA will make rules to implement the PISCES framework, including for example the disclosure requirements that will apply to PISCES companies and how trading events will be organised and run.
The regulations broadly reflect the draft on which HM Treasury consulted from November last year. They confirm that in order to be sold on a PISCES market, shares will need to be freely transferable and not have been admitted to trading on a public market in the UK or abroad. A company with multiple classes of shares will be able to determine which of the share classes may be auctioned during the PISCES trading windows. It will be possible to retain a class of non-transferrable shares that may not be sold on a PISCES platform.
The PISCES regulations make some changes to the list of persons who may participate in the PISCES sandbox. In line with the original proposal, most retail investors are prohibited from trading, but professional clients, sophisticated investors and high net-worth investors and employee benefit trustees will be eligible to trade. Employees or officers of PISCES companies (or other companies in the same group) will also be eligible and in an expansion of the investor definitions, so will those providing consultancy and managerial services to PISCES companies and their group companies.
The Government had already confirmed that buybacks will not be permitted on PISCES markets, although this may be explored at a later stage. The PISCES regulations now make clear that a financial intermediary must not place an order for a PISCES company if the effect of that order would be that the PISCES company buys or sells its own PISCES shares.
HMRC technical note on PISCES tax implications: It had already been confirmed that PISCES transactions will be exempt from stamp duty and SDRT (in line with the existing AIM exemption).
HMRC have now published a technical note providing guidance as to how PISCES trading events will interact with discretionary tax advantaged share schemes. A PISCES trading window can be an exercise event for new Enterprise Management Incentives (EMI) and company share option plan (CSOP) options, although specific wording will be needed in plan documents to permit this.
On 15 May 2025, the Government published a written statement confirming that it will include legislation in the next Finance Bill which will also permit existing EMI and CSOP options to be amended to include admission to trading on PISCES as an exercise trigger without adversely impacting the tax-advantaged status of the options. Companies will need to make amendments to the subsisting award agreements but such changes should not be made until the new legislation is available.
There are other tax implications to consider if a company is considering lifting or varying any share restrictions (including in relation to voluntary transfers) that apply to a class of shares that are held by officers or employees. In order to mitigate the risk of an unwelcome employer’s NIC charge, advice on this issue should therefore be factored into any transaction readiness advice when considering the use of any PISCES platform.
Next steps: We await the final version of the FCA’s rules for PISCES. An interim update published in April gave us some hints as to the results of the FCA’s consultation, including a lighter disclosure burden for PISCES companies than originally envisaged.
The PISCES sandbox will run until 5 June 2030, although it may be extended by the Government if necessary. The Treasury hopes that the first PISCES trading events will take place before the end of this year.
Nicholas McVeigh & Arthur Horsfall, Mishcon de Reya
