The London Stock Exchange is authorized to operate the private Pisces stock market

Shares of private companies will be available for purchase and sale on the Pisces market

However, who can use it, when will it launch, and how will it operate?

A new kind of private stock market called the Pisces platform has been approved for operation by the London Stock Exchange (LSE).

On August 26, it was confirmed by the Financial Conduct Authority (FCA) that the London Stock Exchange was the first operator to be approved to operate Pisces, the first regulated private stock market in history.

Investors can purchase and sell shares in private companies through the Pisces marketplace, which stands for Private Intermittent Securities and Capital Exchange System.

Last November, during her speech at Mansion House, the chancellor announced plans to launch the market.

The London Stock Exchange receiving FCA approval is the "latest significant milestone" for Pisces, according to Emma Reynolds, economic secretary to the Treasury.

The government is "committed to working with the regulators and business to enhance our capital markets offering, supporting economic growth, and putting more money in working people's pockets," she continued.

LSE CEO Julia Hoggett made the following statement: "We are excited to welcome the first private companies to use the market after they have finished their preparations and to increase the options available to them to achieve their goals.

Not all retail investors can invest in Pisces. We describe how the market operates, when it will open, and who will be able to purchase and sell shares.

What is Pisces going to do?

A new private stock market called Pisces offers investors more chances to purchase shares in expanding businesses.

Its goals are to increase private market liquidity and entice big start-ups and scale-ups to list in London.

Instead, Pisces platforms will host "intermittent" trading events, which is different from a public market listing. Businesses that use a Pisces platform, for instance, can regulate who can purchase their shares and when they can be traded.

We may see more Pisces platforms approved, even though the LSE is the first operator to be authorized to run Pisces. Aquis, London's rival stock exchange, is reportedly considering opening one.

The government has suggested that Pisces share transactions be exempt from stamp duty, but it is unclear what fees will be associated with buying and selling shares.

On Pisces, who is able to purchase and sell shares?

Pisces will typically only be available to high net worth individuals, institutional investors, and staff members of participating businesses.

A person who earns at least £100,000 (excluding one-time pension withdrawals) or has net assets worth at least £250,000 is considered a high net worth individual, according to the FCA.

Although self-certified and other sophisticated investors may be able to trade shares, being categorized as a sophisticated investor typically necessitates having relevant investment experience and knowledge.

The FCA states that Pisces companies have the right to limit who can purchase their shares if doing so advances or safeguards their legitimate business interests.

They are not permitted to place any additional limitations on the investors' options for selling their shares, though.

Employees of companies whose shares are traded on Pisces platforms are permitted by Treasury regulations to either purchase or sell their current shares in the company they work for.

Access has been limited to high net worth individuals, institutional investors, and employees of participating companies, which is frustrating, says Michael Healy, UK managing director at investment and trading platform IG. Since the majority of retail investors are excluded, the UK runs the risk of lagging behind recent advancements in the US.

When will it start?

Later this year, the London Stock Exchange plans to launch its Pisces platform.

Prior to establishing a permanent regime in 2030, the FCA is presently testing the design.

Which businesses might open on Pisces?

Companies that have expressed interest in listing on Pisces include Revolut, Octopus Energy, ClearScore, and SME lender Oaknorth.

Investment analyst Dan Coatsworth of AJ Bell tells BFIA that the platform may be helpful for rapidly expanding fintech companies seeking institutional funding as well as a way for employees to sell their stock.

Because Pisces won't facilitate capital raising and won't be accessible to the general public, he continues, it won't take the place of an established stock market like AIM.

A company may, nevertheless, be "whet the appetite" to pursue a listing on the stock exchange.

"The idea of having different people own different parts of a private company could be easier for private companies to adjust to.

According to him, "it might act as a stepping stone towards a public stock listing, getting them 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."

Investigate more aim.