The Financial Conduct Authority (FCA) has set out rules for how firms using the Private Intermittent Securities and Capital Exchange System (PISCES) can promote and communicate the sale of private company shares.
PISCES is a new legal framework that allows FCA-approved firms to run regulated trading events for private company shares. It aims to boost the UK’s capital markets by making it easier for investors to buy and sell these shares during set trading windows.
Following on from a consultation, the FCA has confirmed that PISCES operators must include a clear market risk warning with every communication on their platform.
This ensures investors understand that trading private company shares through PISCES carries higher risks than public markets. By being upfront about these risks, PISCES is more likely to attract informed investors who value transparency and responsible investing.
The FCA noted the risk warning should be simple and straightforward, highlighting key points like limited trading opportunities, less regulatory oversight and potential information gaps.
For example, a warning such as “Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong. LINK: Take 2 mins to learn more” must be included in communications and promotions.
In addition, intermediaries must also show retail investors a personalised risk warning before they distribute a PISCES share, such as “[Client name], this is a high-risk investment. How would you feel if you lost the money you’re about to invest? Take 2 mins to learn more.”
The FCA also confirmed it will ban firms from offering any monetary or non-monetary incentives to encourage investments when promoting or communicating about a PISCES share.
In addition, the FCA has removed the rule that disclosures must be easy to understand, short and detailed to make things easier for PISCES operators and companies, and to match how private markets usually work.
However, companies still need to provide clear information so investors can make informed decisions. Also, the usual financial promotion rules about being clear, fair, and not misleading won’t apply to these PISCES disclosures under the new government exemption.