Question proposed, That the clause stand part of the Bill.

Clause 56 introduces a power enabling changes to be made to stamp duty and stamp duty reserve tax in relation to financial market infrastructure sandboxes. The Government are committed to developing the UK’s capital markets and, as part of that, have announced that they will take forward the private intermittent securities and capital exchange system, known as PISCES. That power will be used to provide an exemption from stamp duty and stamp duty reserve tax for PISCES transactions. This will be a carefully targeted exemption, representing a cost-effective approach to boosting growing private companies and supporting our capital markets.

PISCES is a new type of trading platform that will allow private companies to have their shares traded intermittently, supporting private companies to scale and grow, and boosting the pipeline of future initial public offerings in the UK. Using powers from the Financial Services and Markets Act 2023, which was introduced by the previous Government, this Government will establish the regulatory framework for PISCES in a financial market infrastructure sandbox. That will allow the Treasury to temporarily modify or disapply certain pieces of legislation, to support market operators to trial new or developing technologies or practices, while still achieving appropriate regulatory outcomes. The Government published a response to the PISCES consultation paper at Mansion House on 14 November 2024. As part of this, the Government will lay a statutory instrument to establish the PISCES sandbox by May this year.

Clause 56 will allow the Treasury to make stamp duty and stamp duty reserve tax changes by statutory instrument, in connection with any exercise of the time-limited FMI sandbox power in the Financial Services and Markets Act 2023. The power will be used to introduce an exemption from stamp duty and stamp duty reserve tax for PISCES transactions, as announced at the autumn Budget. That exemption will boost the attractiveness of PISCES, incentivising investors and private companies to participate, and it demonstrates the Government’s commitment to the success of PISCES as part of our wider ambitions to reinvigorate UK capital markets and to deliver growth. The Government will introduce this exemption ahead of the first PISCES trading events. The effect of the exemption will be time-limited, in line with the duration of the PISCES sandbox.

Clause 56 introduces a stamp duty and stamp duty reserve tax power in relation to financial market infra-structure sandboxes that will be used to provide an exemption for PISCES transactions. This will increase the attractiveness of PISCES and demonstrates the Government’s commitment to ensuring its success. The announcement of the exemption has been welcomed by stakeholders.

As we heard from the Minister, clause 56 introduces a power enabling the Treasury to make stamp duty and stamp duty reserve tax changes in connection with any exercise of the time-limited financial market infrastructure sandbox power. This power will be used to provide an exemption from stamp duty for PISCES transactions, and we warmly welcome these measures.

Like many other aspects of the Bill that we have discussed today, the PISCES trading platform was the previous Government’s idea, as part of our commitment to trial new or developing technologies and practices to help companies to scale and grow. While in government, we introduced significant reforms to the UK listings regime, supporting public markets and companies choosing to list in the UK. That included implementing Lord Hill’s listing review reforms. The PISCES consultation noted:

“A key challenge for private companies is that, at early stages in their growth, there are no standardised ways for shareholders to realise their gains…or to allow companies to rationalise their shareholder base by providing their early investors an exit route. Similarly, it is harder for investors to access companies that are not yet operating on public markets.”

PISCES provides a regulatory framework for the intermittent trading of private company shares on a multilateral system. I welcome the Government’s support for PISCES, which will form an important part of the UK’s offer to companies seeking to grow and list in the UK.

I would be grateful if the Minister provided an update on the impact that PISCES is expected to have by incentivising current and potential investors to buy shares on the system, bringing greater transparency and efficiency. I note that PISCES will run for an initial period of five years. Will the Minister commit to regularly updating the House on progress?

There will not be a public market-style market abuse regime; instead, the Financial Conduct Authority will be given rule-making powers over a disclosure regime. I am sure the answer will be yes, but can the Minister confirm that it is her expectation that the FCA will be properly focused on growth as it devises those rules, and that it will ensure that any new rules are proportionate to the objective that we are seeking to achieve?

The provisions of clause 56 relate specifically to exempting PISCES share transfers from stamp duty and stamp duty reserve tax, a measure that, in their response to the consultation, UK Finance and the Association for Financial Markets in Europe said

“should be strongly considered by HMT in order to help incentivise use of the platform”.

They added that it is important

“to generally reduce frictions for companies and shareholders using the platform as far as…possible,” and the FCA rules are important in that respect.

Stamp duty and SDRT both tax transactions that transfer securities between parties in exchange for payment. In 2023, the then Government held a consultation entitled “Stamp Taxes on Shares modernisation” and proposed a mandatory single tax on securities instead of separate taxes for electronic transfers and paper instruments. It was suggested that that approach would reduce complexity, and it was widely supported in the call for evidence responses and by the working group that was established. In considering the application of both taxes, I would be grateful if the Minister provided an update on this Government’s view on the previous Government’s proposals, and whether she plans to bring forward any changes in the future.

As I have set out, we support the measures, but I would be grateful for responses to the points I have raised.

I thank the shadow Minister for the way he has approached this subject. He is correct, of course, that the previous Government consulted on PISCES in March last year. We responded to the consultation in November, alongside the Mansion House speech delivered by my right hon. Friend the Chancellor.

I am glad that there is cross-party agreement on these issues. When we were in opposition, we were very constructive in our feedback on such proposals. The shadow Minister is right that there are other reforms in this area, which came from the Lord Hill listings review and others—there were other reviews pertinent to capital markets when the Conservative party was in government.

The shadow Minister asked me a number of questions. On estimating the impact, it is really important to note that many stakeholders in the City and across financial services, not least the Investment Association, have welcomed this innovation. We know that investors and those in the market are interested in it, and I think there is great optimism about the demand for shares on PISCES. We still have to lay the statutory instrument, but the innovation is of interest to Members across the House, so I am very happy to update it on the development of PISCES.

On the shadow Minister’s questions about the FCA, we stress to the financial services regulators at every opportunity that any new rules should be proportionate, and I assure him that that is how I will approach my work with the FCA. On his final question, although I am quite new to this position, I am familiar with the demands for the simplification of stamp duty and stamp duty reserve tax—we might make it a little bit easier to say, let alone to pay. I will absolutely prioritise looking at simplification, because any kind of simplification is good for the market and helps to get things going. I am happy to look at that, but I cannot give the shadow Minister an exact answer now.

Question put and agreed to.

Clause 56 accordingly ordered to stand part of the Bill.