Pisces: UK regulated market for private shares [pdf] | Hacker News Reader

Pisces: UK regulated market for private shares [pdf]

assets.publishing.service.gov.uk

24 pointsthom14 comments

This might be very useful for startups looking to make equity compensation more attractive: Usually those shares are worthless until the company is sold or goes public. But with Pisces companies from any country can set up to be traded on Pisces until the company goes public. That allows employees to trade their shares on a semi-public platform with each other and anyone else who is on the platform, making those shares actually worth something in more than the accounting sense.

I am having trouble imagining why (and how) the simple act of enabling trade of private stock would somehow unlock more value (energy? wealth?)

I must be missing something

I just skimmed the docs, but I heard about it a few days ago. Noteworthy points: * it's not a way for companies to raise capital * not much in the way of regulation. Main UK listings are quite rigorous. The UK has an AIM market, in which a company is sponsored by a broker. It's a "junior" market. It's very wild-west, and the long-term performance has been bad. That's mostly because the constituents are some of the biggest piles of garbage imaginable. There are some high-quality ones, though * Trading is infrequent, like once a quarter or something. * It's mainly designed for professional investors and and "eligible" investors (you'll probably need liquid assets of at least £1m to qualify) * I think it's intended for small companies to get used to public scrutiny, with a view that they will get a proper listing

I think the Tory gov't had mooted such a scheme, but nothing materialised. Labour has implemented it. I'm a critic of Labour supporter, but I suppose I should at least give them some kudos for trying. My more impartial evaluation is that I don't think it will provide much value.

Interestingly, there used to exist another public exchange for UK shares outside LSE (London Stock Exchange) - maybe its PLUS or OFEX that I'm thinking about - but they closed down now. It was pretty cruddy from what little I saw, with gigantic spreads.

The tiddly exchanges don't really make much sense IMV. Why would I want to invest in companies that are likely to be pretty junky, are unlikely to treat their external shareholders fairly, have dubious corporate governance, and enormous spreads? I could buy into much higher-quality companies on LSE.

Just my 2c. * It's a five-year trial, whereupon the results will be evaluated.

Certain AIM listed shares are/were quite popular as an inheritance tax mitigation (hold for 2 years and receive 100% inheritance tax relief).

Sounds like the 2024 budget is attacking AIM IHT relief as well ... another nail in the coffin for the UK. I only used grok but it said relief is only 50% now.

I think it’s less about companies getting ready for scrutiny (although that’d be a great side effect) and more about giving angels and other early stage investors better access to secondary capital so they can reinvest the proceeds. The UK is not awash with liquidity right now.

Are private shares traded amongst parties still "private shares"

What's the difference between trading on "pisces" and trading on London's Stock Exchange?

Is it just legal gymnastics? Like everything is the same (de facto) but just that different laws apply (de juris)?

Reads a bit like legal gymnastics, or maybe an admission that the regulations around publicly listed companies are too difficult to meet for smaller players.

Less regulation, but in turn it's not as public ("Only institutional investors, employees of participating companies and investors who can meet the definition of high net-worth individuals and self-certified or certified sophisticated investors under the Financial Promotion Order (FPO), will be able to buy shares on PISCES"). Also no issuing of new shares and no buybacks, only trading of existing shares.

Being publicly listed means you have to follow the rules that apply to PLCs. In particular, you have to publish accounts.

What happens to company shares that are traded on pisces if after the 5 year sandbox experiment the scheme is scraped?

So is this a more accessible public market for companies that don't want to/can't be listed on the big exchanges?

Is participation mandatory to some extent or entirely optional?

The answer to this question is important to understand, otherwise this marketplace may seem attractive to lesser-scrupulous companies and scoundrels, and keep the legitimate players away.

No retail investors and no reporting requirements, I'm pro capitalism but why should only the largest people own private SME's? I appreciate buying stocks in your local "metal work shop 'done good'" comes with risk, but really? So much risk that only the big players can play? Seems wrong - its not going to stop foreign countries buying up the market?

Yes, it is wrong. Regalar people are allowed to put money in SIPP's that can have their IHT relief or anything changed at the whim of the government but actualy regulated companies are a no-no. The UK is going down hill fast.

What we really need is exposure limits. Most trading platforms and even pensions ask you all kind of questions about income and wealth. There is no reason we can't simply have simple rules around percent of wealth invested in higher risk stuff. It would at least be better than literally instituting a class system and making things inaccessible to a large percentage of people.

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