The London Stock Exchange’s plan to let private companies trade shares just twice a year on a new private stock market will not offer firms or investors enough trading volume, according to the boss of a rival platform that hopes to launch next month.
Mike McCudden, chief executive of private shares platform JP Jenkins, told City AM that his firm’s ‘Pisces’ stock market would grant companies the opportunity for monthly or continuous trading in blocks, in a major point of difference from the upcoming product from the LSE.
“We’re offering an auction every month or every other month, or you can have continuous trading blocks,” McCudden said. “So you’ve got two weeks of every month where your stock is open for receiving orders and trading, and you can receive orders anytime within this two-week block period.”
Pisces should offer ‘regular trading blocks’
Last month, the LSE became the first operator to receive approval to run ‘Pisces’ – a new marketplace that will allow investors to buy and sell shares in large private companies intermittently.
The fledgling exchange, which is being launched under the auspices of the Treasury and regulated by the Financial Conduct Authority, is an attempt to boost liquidity in private markets and help inculcate some of the UK’s largest IPO contenders for a float on London’s main bourse.
The LSE’s Pisces will, for £25,000, offer companies the opportunity for their shares to be traded at an auction twice a year, with a third auction on offer for an additional £15,000. But in a shock move confirmed last month, the operator will also waive fees for firms’ first year on their framework.
McCudden, whose firm will charge £15,000 in total, said despite the LSE’s offer of a free first year, he expected clients to prefer to have their shares traded as much as possible, and that “nine out of 10” that he’d spoken to preferred continuous trading.
Permanent trading will not be permitted on Pisces exchanges, but McCudden said JP Jenkins would seek to minimise its clients’ reliance on administration-heavy auctions, by also offering intermittent “trading blocks” when constituents’ shares can be bought and sold at any time.
“We’re already finding that the customers that we’re speaking to about Pisces,” he said. “As predicted – all want continuous trading blocks.”
JP Jenkins ‘ready to launch’ next month
McCudden added that his private markets firm, which is owned by tech solutions group Infinitix, has already lodged its application to be a Pisces operator with the FCA, and will be ready to launch next month should it get the regulatory green light.
“Our plan is to launch in October with our Pisces venue,” he said. “It’s in the lap of the gods as to whether that’s going to happen but we’re ready to launch.”
McCudden’s bullish comments come despite rival LSE attracting dozens of the UK’s largest scale-up companies to a private conference hosted by boss Julia Hogget for private companies interested in joining Pisces.
City AM revealed in July that several multi-billion pound companies, including Revolut, Octopus and Oaknorth, joined the gathering, in an early endorsement for the LSE’s venue.
But McCudden confirmed JP Jenkins‘ exchange had already solicited interest from a host of “pretty large” companies.