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LSEG aims to launch private market by year end

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Globacap says likely to apply for authorisation

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Britain catches up with Nasdaq and Guernsey

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UK hopes new market will build up listings pipeline

By Huw Jones

LONDON, March 6 (Reuters) - Britain set out draft rules

on Wednesday for unlisted companies to sell shares on an

exchange, helping to diversify ownership by allowing venture

capital to relinquish some of their stakes and build up a better

pipeline of listings to compete with New York.

Britain's finance minister Jeremy Hunt unveiled plans for an

'intermittent trading venue' in December 2022 in his 'Edinburgh

Reforms' to bolster London's post-Brexit international appeal to

investors and companies.

In his budget on Wednesday, Hunt set out for public

consultation rules for a Private Intermittent Securities and

Capital Exchange System, or Pisces.

Similar precedents have been set in other markets. Rival

exchange Nasdaq in New York has long had a private market

segment for share auctions, and Guernsey-based International

Stock Exchange also operates a private markets segment.

"Investors will gain better access to exciting companies

while also benefiting from greater transparency and efficiency

than available in private markets," the finance ministry said in

a statement.

"This proposal will support the pipeline for future

initial public offerings (IPOs) in the UK, by improving the

interface between private companies and UK public markets, and

complementing the government's wide ranging and ongoing reforms

to boost the UK as a listing destination."

The London Stock Exchange ( LDNXF ) plans to launch such a

system by year-end, if it gets regulatory approval, saying it

would bridge public and private equity markets, help companies

scale up and boost listings.

Currently, private companies not ready for a costly public

listing and its heavier regulation have limited choices, such as

a trade sale, which could see the firm being taken over by a

competitor, or a cumbersome block sale.

Pisces will only be for trading existing shares, and not for

raising new capital, thereby easing disclosure requirements and

costs.

On the LSE, institutional investors from across the world

would be able to trade on a certain number of days a year in the

private shares, after eligibility checks with a broker, with the

transaction settled within two business days.

"The introduction of a venue that provides private companies

with choice in how and when they access liquidity, and gives

shareholders opportunities to enter and exit investments, could

be transformational for UK capital markets," LSEG Chief

Executive David Schwimmer said.

Globacap, a capital markets tech firm, said it is likely to

apply for authorisation to operate a 'Pisces' when the rules are

finalised.

"Even with the introduction of Pisces, the UK is still

playing catch-up," Globacap co-founder and CEO Myles Milston

said. "But, if it's deployed in the right way it could be a real

catalyst for the UK's private markets ecosystem."

Pisces dovetails with the Mansion House Compact, in which 10

pension funds have committed to investing up to 5% of their cash

in unlisted growth companies.