PISCES Consultation – uncharted waters for employee participation in private markets

At the recent Share Plan Lawyers (SPL) annual seminar, a representative of the London Stock Exchange Group joined to discuss the proposed new trading platform for private companies, known as the Private Intermittent Securities and Capital Exchange System (PISCES).

The UK government is currently consulting on PISCES, which is designed to increase liquidity in private markets. One of its stated aims is to help employee shareholders realise gains, however there are a number of considerations for employee shareholders and option holders. 

It will be key to understand the extent to which employee option holders will be able to exercise their options and sell their shares through PISCES. 

Any ability to exercise and sell would need to be set up in the option terms, particularly for UK tax-favoured options with limited flexibility to use discretion or introduce exercise triggers post-grant. PISCES trading could have an impact on share valuations and result in shares being readily convertible assets (RCAs) subject to both national insurance contributions (NICs) and tax withholding obligations when they are acquired. 

Another fundamental consideration is the ability for employees to buy shares through PISCES, including tax treatment and elections for restricted shares, confidentiality concerns in adhering to investment terms and inside information issues. 

Join the debate as we await the outcome of the government's consultation. For further information explore the insights in our recent article PISCES – liquidity through secondary transactions – UK Treasury consultation (taylorwessing.com) and see our briefing earlier this year.