The Financial Conduct Authority (FCA) has recently announced a consultation on proposals to introduce a new private stock market in the UK. This initiative, aimed at increasing access to capital and enhancing market efficiency, could significantly impact the way private companies raise funds and engage with institutional investors.
For founders, investors, and corporates alike, the introduction of a private stock market represents a major opportunity to unlock liquidity, streamline fundraising processes, and foster greater investment into private businesses—all within a regulated framework.
What is the FCA’s Proposed Private Stock Market?
The FCA’s consultation proposes the establishment of a regulated Private Intermittent Securities and Capital Exchange System (PISCES). This private market will allow institutional investors to buy and sell shares in private companies without requiring these businesses to list publicly. Key features of the proposed system include:
- Access for Institutional Investors Only: Designed to maintain focus on sophisticated market participants.
- Reduced Administrative Burden: Companies can raise capital and facilitate share transactions without the ongoing obligations of a public listing.
- Greater Liquidity: Shares of private companies can trade periodically, providing liquidity to early investors, founders, and employees.
This initiative reflects the FCA’s recognition of the need for alternative capital-raising solutions in the UK to support innovation, investment, and economic growth.
Why This Matters for Founders and Corporates
For private company founders and executives, this proposal offers a new way to raise funds and manage shareholder interests without the pressures of a public listing. The benefits include:
- Capital Raising Flexibility: A private stock market can offer founders the ability to secure large-scale investment from institutional investors while retaining greater control over their company.
- Liquidity for Founders and Employees: The new framework enables secondary share sales, providing a route for founders, employees, and early investors to realise value.
- Reduced Compliance Burden: Unlike public markets, participating in this system would involve fewer disclosure and reporting obligations, reducing administrative overheads.
Opportunities for Investors
For institutional investors, such as venture capital and private equity funds, the FCA’s proposal could open up greater opportunities to access high-potential companies while benefiting from enhanced liquidity mechanisms. Key advantages include:
- Increased Access to Private Companies: Investors can engage in share transactions for fast-growing private businesses previously restricted to closed markets.
- Liquidity in Illiquid Markets: The system allows periodic share trading, enabling investors to exit or re-balance positions more easily.
- Confidence Through Regulation: Operating within a regulated framework enhances trust and accountability for all participants.
How Avery Law Can Support You
At Avery Law, we recognise that the introduction of a private stock market represents a significant shift in the capital-raising landscape. For founders, corporates, and institutional investors, understanding the regulatory and legal framework will be essential for leveraging this opportunity.
Our team provides expert legal support to help you:
- Navigate Regulatory Compliance: Ensure your business meets the FCA’s requirements for participation in this new market.
- Structure Transactions: Draft and negotiate agreements for capital raising and secondary share sales.
- Governance and Reporting: Implement governance structures that align with FCA expectations while minimising administrative burdens.
- Investor Relations: Support communications and obligations with institutional investors engaging in share transactions.
Preparing for the Future of Private Markets
The FCA’s proposed private stock market is a step forward in enhancing capital access, liquidity, and investor opportunities in the UK. For companies looking to scale, this could provide a vital avenue to raise funds and manage shareholder interests efficiently.
As the consultation progresses, founders, investors, and corporates should remain proactive in understanding the potential impacts on their business and investment strategies.
Get in Touch
Avery Law is ready to help you prepare for the opportunities and challenges presented by the FCA’s private stock market proposals. Contact us today to learn how we can support you in navigating this new frontier for capital raising and share transactions.