PISCES: The UK’s bet on founder- and employee-friendly capital markets

In a significant move to bolster the UK’s capital markets and give startups a competitive edge compared to European rivals and those further afield, the UK government yesterday unveiled its plans for PISCES - Private Intermittent Securities and Capital Exchange System.

It’s an initiative that enables private companies to trade their shares in controlled, periodic windows on a new platform tailored for secondary transactions. It’s also poised to reshape how startups grow, how investors engage, and how talent is rewarded.

Here’s a quick breakdown of what’s changing - and why it matters...

What is PISCES?

Announced as part of the UK’s broader capital markets reform, PISCES creates a regulatory sandbox for unlisted companies to allow periodic share trading events; think of it as a “mini stock exchange” for private firms. It brings liquidity to a traditionally illiquid space, letting employees, early-stage investors (like SEIS and EIS participants), and founders partially cash out without waiting for a full exit event like an IPO or acquisition.

This is designed to:

• Improve capital formation for startups and scale-ups,

• Give employees and founders clearer pathways to liquidity, and

• Help VCs and institutional investors build stronger secondary markets.

Is it really the first of its kind?

The UK is by no means the first market to enable broader exit opportunities in the private markets. This kind of activity has long been possible in the US but in a less formal, regulated environment. The US ‘system’ is technically regulated by the SEC via the 144/701 rules but it’s somewhat informal - trades are often negotiated individually on a case-by-case basis. In comparison, trades under PISCES will be possible via scheduled, official windows.

There are also differences regarding which groups are able to utilise the system. In the US, only accredited investors are able to trade, compared to the UK’s system which will be more open, available to employees, high net-worth individuals and sophisticated investors. Clearly neither are free for all scenarios… In both contexts, companies ultimately choose when to allow trading and set the terms but in the US, this is more tightly restricted by companies via Rights of First Refusal and varied board approval requirements.

Given the broader, more official, government-led nature of PISCES, the trades will be enabled via government-owned platform, unlike the US, where CartaX, Forge and EquityZen are privately owned platforms with their own access rules and therefore limited standardisation.

Similar initiatives have been proposed in France (an Innovation Stock Market) and India. The most similar to PISCES is Singapore's ADDX, which is a regulated private securities exchange, but this is primarily focused on tokenised shares and fund products.

So…yes, it is the first of its kind.

It’s government-led, official, open to employees, it provides a controlled mechanism for exchange, the rules are centralised, it is designed to attract the best startups and VCs to the UK, and built with tax efficiency in mind, particularly for employees, for whom this arguably makes the biggest difference.  

Why it’s a big deal

Secondaries are coming to the mainstream. While secondaries have long existed informally, PISCES legitimises them at scale, giving early backers a structured exit path and inviting new capital without the typical valuation reset of a new funding round.

SEIS and EIS investors look likely to be able to cash out early, as will employees, opening up some interesting opportunities for professional or hobbyist investors looking to buy-up shares in companies on the up. 

Five market shifts to watch

1. A new exit path for accelerators & incubators

   Incubators will now have a way to realise gains earlier and recycle capital into new startups.

   
   

2. EU startups may relocate to the UK

   With few equivalents in Europe, UK incorporation just got more attractive to international founders.

   
   

3. Secondary funds will proliferate

   Expect to see dedicated secondary funds emerge, snapping up shares from employees and early angels looking to de-risk.

   
   

4. Employee share plans get real liquidity

   Instead of waiting 5–10 years for a major liquidity event, staff may now see real value from their equity sooner — changing how compensation packages are structured.

   
   

5. More transparency, more complexity

   The level of data available on those exchanges could open up a can of worms. With periodic trades comes visibility — and scrutiny of early stage companies where hype and momentum matters, even if the numbers haven’t caught up yet... Valuations, growth rates, and governance practices will be watched more closely.

Winners and Questions

Winners:

• UK VCs - better liquidity, more exit options, higher IRR potential

• Employees - real options to monetise equity sooner

• Advisors/Consultants - share-for-service models become more viable

• Secondary buyers - new opportunities to access fast-growing private companies

Unanswered Questions:

• How/ will startups limit employee rights to sell?

• Will vesting terms or equity generosity shift in response?

• Will this drive longer or shorter holding periods?

PISCES is a bold experiment and the UK is the first major economy to try it in the structure outlined above.

In a post-Brexit world, this could become a significant competitive advantage in attracting startups and capital. While not without its complexities, PISCES gives the UK a chance to become (or grow its lead...?) as the premier private market hub in Europe- maybe even globally.

As someone in our groupchat said: this is a great time to do something UK-centric. 

They might be right.