The FCA has launched a consultation on the proposed launch of a new private stock market called Pisces. Here’s a look at how it would work.
If successful, the new private stock market could generate a pipeline of companies for a full IPO on a public market in the future. However, there will be restrictions on who can buy and sell shares on the platform, meaning it won’t replace an established market like AIM.
“The proposed new stock market called ‘Pisces’ could help private companies get used to the idea of slices of their business being owned by different people,” Dan Coatsworth, investment analyst at AJ Bell, said in an email note to Euronews Business.
“It might act as a stepping stone towards a full IPO and fits well into broader plans to make the UK a more attractive place for companies to list their shares.”
New habits for private companies under Pisces
Coatsworth further noted that Pisces should help privately-owned companies get used to regular financial reporting, transparency as a business, and understanding that a company is run for the best interests of shareholders, not the board of directors.
“It could also encourage staff in companies using Pisces to develop a saving and investing habit. One of the biggest stumbling blocks for private company share ownership is that staff are often put off by the general inability to sell those shares at regular intervals.
“A lot of private companies won’t offer the ability for staff to trade shares, meaning some people are stuck owning the equity until the business either lists on a public market or there is an internal event where they can sell down,” he added.
Improved liquidity prospects for private firms
The analyst also said that in theory, Pisces could improve liquidity by allowing private company shares to be traded at more regular intervals.
“However, it has only been designed for intermittent trading, not the continuous trading during market hours that you get with publicly listed stocks. Such restrictions would give a company control over when changes in share ownership can happen,” he added.
Not a good year for London’s stock exchange
The consultation comes as London’s stock exchange is on course for its worst year for company departures since the financial crisis.
FTSE group Ashtead is among the latest companies to shift its primary listing to New York, where it makes nearly all its profits. Just Eat Takeaway, meanwhile, delisted in recent weeks from London in another blow to the UK market.
