The UK’s financial regulator has launched an industry consultation on a proposed new private equity market, with specific mention of how to communicate its risks to the cohort of individual investors it seeks to target.
In an announcement to accompany a broad consultation paper, the Financial Conduct Authority (FCA) said The Private Intermittent Securities and Capital Exchange System (PISCES), which is set to be laid before parliament in May 2025, “will open the door to more opportunities for investor to take stakes in private companies”.
The aim of the venture – outlined by the current and previous governments – is to inject capital into the UK’s unlisted and growth companies, with domestic individual investors key targets.
Yet, the FCA noted that “such opportunities come with risk, which is why [we are] consulting on risk warnings for investors to help them make informed investment decisions”.
PISCES, which was a central pillar of the Chancellor’s October budget, aims to create a new market that “could transform how private companies access funds and grow,” according to Simon Walls, interim director of markets at the FCA.
It will initially be delivered through the financial markets infrastructure (FMI) sandbox, which will allow the regulator to test the design before finalising the permanent regime, it said.
The FMI has already been used to roll out the Digital Securities Sandbox, launched earlier this year.
Within the consultation, the FCA has set out specific and detailed notes on how companies operating on PISCES may communicate and market to retail and other individual investors and keep records of all promotional activity.
While certain parts of the existing regulatory framework for private and other non-public investment will apply, PISCES is likely to require additional oversight and resource from those operating within and on the system.
The innovation is the latest to be announced by the regulator, and is set to work alongside central government policy to boost domestic UK investment and growth.
The consultation is open to responses from all interested parties until February 17, 2025.
All information may be found on the FCA website.