The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025

Made: 14th May 2025

Laid before Parliament: 15th May 2025

Coming into force: 5th June 2025

The Treasury make these Regulations in exercise of the powers conferred by sections 21(5) and (6) and 428(3) of the Financial Services and Markets Act 2000[^f00001] and sections 13(1), (4), (5), (6) and (7), 14(3), 16(1) and 84(2) of, and Schedule 4 to, the Financial Services and Markets Act 2023[^f00002].

In accordance with section 16(2) of the Financial Services and Markets Act 2023, the Treasury have consulted the Financial Conduct Authority, being the appropriate regulator[^f00003], and such other persons as the Treasury consider appropriate.

Citation, commencement and extent

1

• (1) These Regulations may be cited as the Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025.

• (2) These Regulations come into force on 5th June 2025.

• (3) These Regulations extend to England and Wales, Scotland and Northern Ireland.

Interpretation

2

In these Regulations—

• “the Act” means the Financial Services and Markets Act 2023;

• “authorised person” has the meaning given in section 31 of FSMA 2000[^f00004];

• “established in the UK” means constituted under the law of any part of the United Kingdom and having, for the duration of the PISCES sandbox arrangements, a registered office or a head office in the United Kingdom;

• “financial intermediary” has the meaning given in regulation 5(5);

• “the FPO” means the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005[^f00005];

• “immediate group” has the meaning given in section 421ZA of FSMA 2000[^f00006];

• “intermittent”, in relation to a trading period, means occasional, not frequent, and of limited duration;

• “MiFIR” means Regulation (EU) No600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No648/2012[^f00007];

• “multilateral system” has the meaning given in Article 2(1)(11) of MiFIR[^f00008];

• “overseas company” has the meaning given in section 1044 of the Companies Act 2006[^f00009];

• “PISCES” has the meaning given in regulation 3(3);

• “PISCES approval notice” or “PAN” means a notice given under regulation 10(3) approving a person described in regulation 4 to operate a PISCES;

• “PISCES company” means a company whose shares are or are intended to be traded on a PISCES;

• “PISCES disclosure arrangements” means the arrangements for the disclosure of information by PISCES companies that PISCES disclosure rules require a PISCES operator to establish and maintain;

• “PISCES disclosure rules” means rules made by the FCA under paragraph (1) of regulation 14 which make provision of the kind mentioned in paragraph (4)(b) of that regulation;

• “PISCES operator” means a person in respect of whom an approval under regulation 10 is in force;

• “PISCES sandbox arrangements” has the meaning given in regulation 3(2);

• “PISCES share” means a share in a PISCES company that is traded, or is to be traded, on a PISCES;

• “PISCES statement” means a statement made by a PISCES company through PISCES disclosure arrangements;

• “the RAO” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001[^f00010].

• “relevant PISCES person” has the meaning given in regulation 12(3);

• “specified PISCES investor” has the meaning given in regulation 5(3).

Creation and operation of the PISCES sandbox

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• (1) These Regulations have effect as an FMI sandbox (the “PISCES sandbox”) for the purposes described in section 13(1)(a) and (b) of the Act (testing of FMI technologies or practices), in so far as those purposes relate to the practice of operating a PISCES in the carrying on, as part of the business of a person specified in regulation 4, of the FMI activity of operating a multilateral system for the trading of shares.

• (2) The FMI sandbox arrangements implemented as part of the PISCES sandbox (“the PISCES sandbox arrangements”) must relate to the FMI activity mentioned in paragraph (1), where carried on as mentioned in that paragraph.

• (3) For the purposes of these Regulations, a “PISCES” is a multilateral system which—

• (a) is for the trading of PISCES shares in intermittent trading periods,

• (b) brings together multiple buying and selling interests in PISCES shares, in the system and in accordance with non-discretionary rules, in a way which results in a contract, and

• (c) allows a PISCES company to determine at least one of the following in respect of the trading of its PISCES shares—

• (i) when the shares may be traded;

• (ii) the persons or categories of person who may buy or sell the shares;

• (iii) restrictions on the trading of the shares, including restrictions requiring a minimum or a maximum price;

• (iv) the persons or categories of person who may receive information about the company or transactions in its shares.

• (4) For the purposes of these Regulations, the appropriate regulator is the FCA.

Persons who may apply for approval to operate a PISCES

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An application to the FCA under regulation 9 for approval to operate a PISCES may be made by—

• (a) a recognised investment exchange that is not an overseas investment exchange, or

• (b) a person who is established in the UK and has a Part 4A permission, as defined in section 55A(5) of FSMA 2000 (application for permission)[^f00011], to carry on one or more of the regulated activities referred to in the following provisions of the RAO—

• (i) article 25(1) (arranging deals in investments)[^f00012];

• (ii) article 25D (operating a multilateral trading facility)[^f00013];

• (iii) article 25DA (operating an organised trading facility)[^f00014].

Other persons who may participate in the PISCES sandbox arrangements

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• (1) The following descriptions of person may participate in the PISCES sandbox arrangements by using a PISCES or carrying on activities in connection with a PISCES—

• (a) an eligible company;

• (b) a person who is the registered holder of, is entitled to purchase or subscribe for, or is otherwise entitled to become the registered holder of, a PISCES share;

• (c) a buyer of a PISCES share;

• (d) a financial intermediary;

• (e) persons who directly or indirectly provide services which relate to the trading of PISCES shares to—

• (i) an eligible company;

• (ii) a person described in paragraph (1)(b) or (c);

• (iii) a PISCES operator;

• (iv) a financial intermediary;

• (f) persons carrying on activities in connection with—

• (i) the trading of a PISCES share;

• (ii) the provision of services as described in sub-paragraph (e).

• (2) In paragraph (1), “eligible company” means a company as defined in section 1(1) of the Companies Act 2006 (companies) that is limited by shares, or an overseas company, except, in either case, if the shares of the company are admitted to trading—

• (a) on a trading venue, as defined in section 313D(1) of FSMA 2000 (interpretation of Part 18A)[^f00015], or

• (b) on a multilateral system outside the United Kingdom.

• (3) In these Regulations, “specified PISCES investor” means—

• (a) a professional client, as defined in Article 2(1)(8) of MiFIR (definitions)[^f00016];

• (b) an individual—

• (i) who within the period of twelve months ending with the day on which the trading period in question is due to end, has completed and signed a statement complying with Part 1 of Schedule 5 to the FPO (statement for high net worth individuals)[^f00017], and

• (ii) whose completion of the statement indicates that they satisfy the conditions set out in that statement to be classified as a high net worth individual;

• (c) a person who falls within any of sub-paragraphs (a) to (c) of article 49(2) of the FPO (high net worth companies, unincorporated associations etc.)[^f00018];

• (d) an individual who has a certificate in writing or other legible form (a “PISCES sophisticated investor certificate”) relating to them, which—

• (i) is to the effect that the individual is sufficiently knowledgeable to understand the risks associated with an investment such as a PISCES share, and

• (ii) is signed and dated by an authorised person within the three years ending with the day on which the trading period in question is due to end;

• (e) an individual—

• (i) who within the period of twelve months ending with the day on which the trading period in question is due to end, has completed and signed a statement complying with Part 2 of Schedule 5 to the FPO (statement for self-certified sophisticated investors)[^f00019], and

• (ii) whose completion of the statement indicates that they satisfy the conditions set out in that statement to be classified as a self-certified sophisticated investor;

• (f) a qualifying individual, as defined in regulation 6, but only in relation to the purchase of shares in the PISCES company in relation to which they are a qualifying individual;

• (g) a person who is a relevant trustee, as defined in article 60(3) of the FPO, in relation to an employee share scheme, as defined in article 60(2) of the FPO (participation in employee share schemes)[^f00020], of the PISCES company in question (but see the modifications to article 60 of the FPO in Part 5 of Schedule 1);

• (h) a trustee of a share incentive plan as defined in section 488(4) of the Income Tax (Earnings and Pensions) Act 2003 (share incentive plans (SIPs))[^f00021], established by the PISCES company in question or a company within its immediate group.

• (4) For the purposes of paragraph (3)—

• (a) the validity of a statement referred to in paragraph (3)(b) or (e) is not affected by a defect in the form or wording of the statement, provided that the defect does not alter the statement’s meaning;

• (b) in the case of a person described in paragraph (3)(c), the reference in article 49(6)(b) of the FPO to the date on which a communication was first made or directed is to be read as referring to the date on which the trading period in question is due to end.

• (5) In these Regulations, “financial intermediary” means—

• (a) an authorised person;

• (b) a member firm or participant with access to a PISCES;

• (c) an appointed representative as defined in section 39(2) of FSMA 2000 (exemption of appointed representatives)[^f00022].

Meaning of “qualifying individual”

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• (1) “Qualifying individual”, in relation to a PISCES company and a trading period, means an individual whose inclusion on a list provided for that trading period by the PISCES company to a financial intermediary or PISCES operator indicates that the individual meets the qualifying conditions in paragraph (2).

• (2) The qualifying conditions, in relation to a PISCES company, are that the individual—

• (a) is employed by, or is a director or other officer of, the PISCES company or a company within its immediate group, or

• (b) personally provides consultancy or managerial services—

• (i) as a party to a contract for services with the PISCES company or a company within its immediate group, or

• (ii) which are placed at the disposal and under the control of the PISCES company or a company within its immediate group, under an arrangement between that company and a third party.

• (3) A PISCES company must not include an individual’s name in a list supplied to a financial intermediary or PISCES operator for the purposes of paragraph (1) unless the individual falls within paragraph (2)(a) or (b).

• (4) In paragraph (2)(a), a “director or other officer”, in the case of a PISCES company that is an overseas company, includes a manager or a secretary.

• (5) In paragraph (2)(b)(ii), “third party” includes a company of which the individual in question is a director, member or employee.

Obligation on financial intermediary to check investor eligibility

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• (1) A financial intermediary must not place an order to buy a PISCES share when dealing with a person (“the client”), whether directly, or through bare trustees, nominees or custodians, unless—

• (a) the client is a qualifying individual as defined in regulation 6, or

• (b) the financial intermediary believes on reasonable grounds that the client will fall within one or more of the other descriptions of specified PISCES investor in regulation 5(3) immediately before the order is to be executed.

• (2) Where a financial intermediary receives an order to buy a PISCES share which—

• (a) is placed by a person (“A”) who is carrying on activities to which the exclusion in article 29(1) of the RAO (arranging deals with or through authorised persons)[^f00023] applies, and