The Financial Conduct Authority (FCA) has spent almost £1.7 million developing a new private stock market regime aimed at enhancing liquidity for private companies and facilitating broader global investor participation. The launch of this five-year project, known as Pisces, signals a bold commitment from the UK government to reinvigorate capital markets following a prolonged period of weak IPO activity, with Britain’s listings fundraising recently hitting a 30-year low.
At its core, Pisces represents a promising opportunity to open up private markets to more participants. Its success, however, will be shaped not only by its regulatory scaffolding, but by the infrastructure underpinning how these assets are valued, tracked, and integrated into broader investment portfolios.
Pisces is not directly designed to encourage new IPOs. Rather, its main objective is to improve liquidity in private assets, and with it the attractiveness of UK capital markets. In doing so, it could, over time, encourage companies to consider future listings in the UK simply because they’re already familiar with its regulatory requirements. But to get there, the underlying inefficiencies of private markets must be squarely addressed.
Unlike public markets, private listings carry fundamentally different risks. Illiquidity, inconsistent valuation methodologies, and fragmented data systems – driven by different trading, valuation, and accounting systems – make it difficult for asset managers to maintain a clear view of performance and exposure. Without a consistent and connected approach to portfolio management, the potential benefits of Pisces risk being undermined by these structural weaknesses.
Valuation fragmentation is a consistent problem. Private assets often rely on periodic or subjective valuations, leading to discrepancies across managers, custodians, and reporting systems. This undermines confidence and comparability. Simultaneously, portfolio opacity remains a real concern. Numerous tech stacks scattered across an asset manager’s business make it harder to see consolidated positions and exposures across both public and private holdings.
The issues are not just operational but also financial. Inaccurate or delayed valuations may distort performance assessments and asset allocation decisions. The issuer structure in private markets is also often opaque, making it difficult to determine the ultimate bearer of risk. And, as the Neil Woodford saga made painfully clear, liquidity risk also remains a critical concern – especially when investors need to exit or reduce positions under pressure.
To fully realise the promise of the Pisces initiative, the market needs more than regulatory reform. It needs foundational change in how portfolios are managed. Market participants must prioritise switching to a unified portfolio management system (PMS) that can bridge the data gap between public and private assets, connect legal entity hierarchies to issuers, and consolidate pricing and reference data from multiple, inconsistent sources. It must also be able to aggregate and present risk, liquidity, and exposure data in real time, and model the workflows around liquidity points – connecting to trading venues and tracking cash availability. Without these essential upgrades to our existing fragmented infrastructure, it would be challenging for an asset manager to hold these positions at all.
The UK’s massive investment in Pisces is a bold move to modernise its capital markets. But without addressing the fragmented infrastructure supporting private asset valuation, investment, and asset servicing, the initiative risks not addressing the very inefficiencies it seeks to overcome. Without a unified approach to portfolio management, Pisces will remain an experimental sandbox, as opposed to a lasting competitive advantage the UK government is crossing its fingers for.
Finbourne Technology is a London-headquartered provider of investment technology.
