(Bloomberg) — A UK regulator said a new framework for private company share sales will create “more of a ‘buyer beware’ market” than a traditional stock exchange, with higher risks of insider trading.
The Financial Conduct Authority said it will monitor the potential for market abuse as it develops the Private Intermittent Securities and Capital Exchange System, or Pisces. Only institutions and professional investors will be able to use the new system, and the operators are still to be confirmed.
Pisces is intended to let private companies open trading windows for employees and early investors to sell stock. Demand for this type of sale has rocketed as startup companies delay stock market listings, meaning shareholders are waiting years to exit.
Unlike firms listed on the stock market, companies selling via Pisces won’t need to publish regular earnings, leaving open the risk that inside information could be used when trading. The FCA said it will ensure investors are informed of the risks.
“Next year we will ring the bell on a new private stock market that could…
