The Private Securities Market: a new dawn for private company liquidity in the UK?
The London Stock Exchange (“LSE”) is set to launch the Private Securities Market (“PSM”), a ground-breaking, FCA-approved trading venue designed specifically for private companies. Operating under the Private Intermittent Securities and Capital Exchange System (“PISCES”) Regulations, the PSM introduces an innovative intermittent auction model, enabling qualifying private companies to offer liquidity for existing shareholders – without the need to become public or comply with the full suite of public market obligations.
The LSE published Market Notice N09/25 which attaches draft market rules for the PSM, including:
- the Private Securities Market Rules (“PSM Rules”), detailing the requirements for companies seeking to join the PSM; and
- the Private Securities Market Handbook, which details how the LSE will approach compliance with the PSM Rules.
1. What is the PSM?
The PSM is not a regulated market or multilateral trading facility. Instead, it is a new category of trading platform, established under the PISCES Regulations, which allows private companies to facilitate periodic liquidity events for their shareholders through scheduled auctions. Crucially, the PSM does not permit primary fundraising—companies cannot issue new shares or raise capital through the platform. The PSM is designed as a “buyer beware” market: investors are responsible for their own due diligence, and neither the LSE nor the FCA verifies or vets company disclosures.
2. Eligibility and application process
To be eligible for the PSM, a company must satisfy at least two of the following criteria:
- Have completed a fundraising (debt or equity) of at least £10 million (or equivalent) within the last three years, with material participation of experienced, independent investors;
- Have total assets of at least £20 million (or equivalent), based on its latest audited financial statements; or
- Have annual turnover of at least £10 million (or equivalent), based on its latest audited financial statements.
Additional requirements include:
- At least two formally appointed directors on its board;
- Appropriate financial accounting and reporting expertise within the board and/or senior management;
- Shareholder approval to join the PSM and, if necessary, amendments to constitutional documents to ensure compliance with the PSM Rules (e.g. to make its shares freely tradeable during an auction);
- Appointment of a registered auction agent (“RAA”) to facilitate investor access and ensure only eligible investors participate; and
- Appointment of a registrar to enable dematerialisation of shares to allow for electronic settlement through a Central Securities Depository, such as CREST.
Applicants must submit a detailed PSM Joining Application through the dedicated PSM Disclosure Portal.
3. How does trading work?
Trading on the PSM is conducted exclusively through intermittent auctions - there is no continuous trading. Companies may choose between:
- Open Auctions: accessible to all eligible PSM investors (e.g. professional clients, high net worth individuals and high net worth companies, as assessed by a RAA)[1]; or
- Permissioned Auctions: restricted to eligible PSM investors or RAAs who meet specific “Permissioned Auction Criteria”, typically set by the company to protect its legitimate commercial interests.
All existing shareholders can sell in a Permissioned Auction unless contractually restricted from doing so.
The PSM Rules set out details and guidance on how to open an auction, including details of the minimum time periods. Broadly, a PSM company must adhere to the following as a minimum:
- By 09:00, ten business days before the auction: submit the auction application and proposed final Core Disclosure (see section 4 below) to the LSE.
- By 16:00, six business days before the auction: satisfy all outstanding conditions and confirmations.
- By 08:00, five business days before the auction: publish final Core Disclosure and any Voluntary Disclosure on the PSM Disclosure Portal.
- By 08:00, one business day before the auction: respond to investor questions (or state that no response will be given).
4. Disclosure regime and investor engagement
Companies are required to publish “Core Disclosure”. This is the minimum, FCA-mandated disclosure information about the company, including business overview, management, financials, capital structure, share information, material contracts, key risks, and major shareholders.[2]
Companies may omit certain information required by the Core Disclosure in certain exceptional circumstances, including where they do not have access to the information or where disclosure is likely to prejudice their legitimate interests.
Companies may also choose to publish any additional information known as “Voluntary Disclosure”.
All disclosure must be published on the PSM Disclosure Portal.
To support engagement on the disclosures, investors can submit questions via the PSM Disclosure Portal. Companies may choose whether to respond, and all responses (or a statement of non-response) must be published by 08:00 on the business day before the auction.
If a PSM company identifies any material new developments or material mistakes or inaccuracies in relation to its disclosures made in respect of a particular auction during an auction window, it must immediately notify the LSE. This will be deemed as an automatic request to delay or halt the auction, depending on whether the request was submitted prior to, or after, the auction commencing. The PSM company must then publish a “Material Disclosure Update”, identifying the information that was out of date or inaccurate as soon as practicable, and publish the date of the next auction in the PSM Disclosure Portal.
5. Ongoing obligations
Once admitted, a PSM company must:
- Continue to meet eligibility criteria and inform the LSE immediately if it ceases to do so;
- Maintain sufficient resources, procedures, and controls to ensure compliance; and
- Ensure all directors accept responsibility for compliance with the PSM Rules.
6. Termination
Companies wishing to exit the PSM must inform the LSE and give at least three months’ notice via the PSM Disclosure Portal, and conduct a final auction before they leave.
The LSE may terminate a PSM company’s participation in the PSM for reasons including non-compliance with the PSM Rules, poor co-operation with the LSE or failure to complete an auction within a period of two years.
Next steps
To encourage participants, the LSE has revealed plans to waive its £25,000 annual fee until 2027. The final market rules will be published and come into effect when the PSM is formally launched, which is expected to be later in 2025. The LSE will provide a further update on timing in due course.
Whilst the LSE is the first PISCES operator to be approved by the FCA, it remains to be seen whether others will follow and, if so, how their offering will differentiate from the PSM.
For more insights on PISCES, please refer to the following CMS articles:
PISCES – FCA finalises rules for new type of trading venue
PISCES: Navigating the New Waters of Private Share Trading
If you have any questions regarding the PISCES regime, please reach out to any of the key contacts listed for this briefing, or your usual CMS contact.
[1] See the “investor protection and promotion” section in our previous Law-Now briefing: PISCES – FCA finalises rules for new type of trading venue.
[2] See the “disclosure obligations” section in our previous Law-Now briefing: PISCES – FCA finalises rules for new type of trading venue.
