RE: PR nonsense on AI18 Dec 2024 01:49
17th December 2024
The FT article
[Insider trading can be legal, FCA says and private-market bagholders only have themselves to blame] According to Ganesha, the Indian Express’s resident astrologist, here’s today’s horoscope for Pisces:
While your earnings may not see a significant boost today, you’ll also avoid unnecessary expenses. Ganesha predicts a balanced day where you manage to maintain your financial equilibrium without any losses. Only some of that applies to Pisces, the FCA’s proposed platform for trading shares in private companies. Expenses are being avoided, though financial equilibrium won’t be easy to maintain. Here’s the FT story on Pisces, the press release, the consultation paper and the draft statutory instrument.
The big idea behind Pisces is a buyer-beware market where investor safeguards won’t apply. Company disclosure is largely discretionary. Insider trading is allowed. Exchanges can set their own entry criteria and companies they list will decide when shares can be bought and sold. Day-to-day monitoring for fraud and market manipulation will be the responsibility of participants. Companies caught lying will be asked to compensate shareholders, assuming they’re still solvent.
If all goes to plan, Pisces (it stands for Private Intermittent Securities and Capital Exchange System) will go live next year within the FCA’s “sandbox” programme, where rules can be tweaked on the fly.
The regulator doesn’t intend to monitor company disclosures, which won’t be made publicly available by default and don’t need to be signed off by the exchange operators. Core reporting requirements cover obvious stuff like major shareholders and material litigation, but Pisceans get to choose what’s important to investors based on their own circumstances. All the core requirements are skippable so long as the company can provide a summary explanation as to why.
The regulator may yet ask private companies using Pisces to announce all price-sensitive information, but is currently of the view that a so-called “sweeper” requirement would be too burdensome. If an investor wants to know more than they’ve been told, it’s their responsibility to ask, it says. What if insiders want to trade on non-public information? Knock yourself out: Pisces operators are required to provide a well‐functioning market for both buyers and sellers. However, there will be a higher risk than in public markets that some investors, such as company employees, could have access to information not available to all other investors. This may benefit some market participants over others. This risk is compounded by potential information‐sharing occurring in the private market before a Pisces trading event. Our disclosure arrangements aim to reduce this risk by providing appropriate information to investors.
https://archive.is/2024.12.17-170259/https://www.ft.com/content/adf351b0-eb9f-418f-a4c4-85c8eb2dcd51
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