THE GRC NAVIGATOR
Your Bi-Weekly GRC Intelligence Briefing
Issue 8 | 01 September 2025
Executive Summary
Top Story: First PISCES Operator Gets Greenlight in Drive for Growth
The FCA has approved the London Stock Exchange to operate a PISCES platform, a new type of private stock market designed to enhance capital raising opportunities for growth companies.
◆ The approval represents a significant milestone in the UK’s strategy to boost growth and competitiveness in financial markets
◆ PISCES (Private Investment in Smaller Companies & Entrepreneurs Scheme) platforms aim to bridge the gap between private and public markets
◆ The LSE’s platform is expected to launch later this year, creating new opportunities for investors to access private market investments
◆ This development follows increased regulatory focus on improving access to capital for small and medium-sized enterprises
This initiative aligns with the UK government’s ambition to make London more attractive for growth companies and investors in private markets. Firms should assess how this new platform might impact their capital raising and investment strategies.
Implications for Capital Allocation:
The PISCES platform introduces a regulated mechanism for intermittent secondary trading of shares in private UK companies, designed to broaden investor access and enhance liquidity for growth-stage companies while maintaining their private status. The platform enables regulated secondary trading of private company shares, allowing company-approved shareholder liquidity events through UK structures. This offers UK-based alternatives to offshore vehicles for secondary transactions but does not currently facilitate primary capital raising or fully replicate Cayman-Delaware continuation fund models.
Secondary Transactions: PISCES enables structured, company-approved secondary sales of existing shares. Companies retain significant control over who can participate as buyers and when shares may be traded. Primary capital raising through new share issuance is not permitted under the PISCES regime at this stage.
Investor Access and Liquidity: Institutional investors, employees, and eligible sophisticated/high net-worth investors gain access to growth companies pre-IPO. Employees may more easily realize value from share options, increasing the effectiveness of equity-based incentives. The market is closed to most retail investors.
Tax Implications: Secondary transfers via PISCES are exempt from stamp duty and stamp duty reserve tax. HMRC has confirmed that trades on PISCES platforms trigger the “specified event” for Enterprise Management Incentive (EMI) and Company Share Option Plan (CSOP) schemes, allowing options to be exercised at a PISCES event without loss of tax benefits. Shares traded are generally treated as “readily convertible assets” for income tax purposes, with updated PAYE/NI responsibilities for companies.
Regulatory and Pension Allocation: PISCES aligns with broader UK ambitions to encourage institutional investment in domestic private-company shares, but specific regulatory capital treatments and pension allocation mandates are subject to ongoing consultation and likely revisions as the sandbox period progresses.
Bridge to Public Markets: The platform primarily supports shareholder liquidity and more orderly secondary trading, bridging the gap between private and public markets while helping companies prepare for a potential IPO or broader fundraisings if desired.
The FCA and Treasury will monitor outcomes over a five-year sandbox period until June 2030, with the potential for permanent legislation or regulatory adaptation based on observed results and competitive pressures, including those from potential EU market reforms.
Regulatory Updates
Failure to Prevent Fraud goes live today
◆ From 1 September 2025, large organisations face a strict-liability corporate offence if an “associated person” commits fraud for the organisation’s benefit and reasonable prevention procedures weren’t in place.
◆ Prosecutors (CPS/SFO) updated guidance in August to emphasise expectations ahead of commencement; the Home Office’s statutory guidance sets out the principles for “reasonable procedures.”
◆ This materially elevates board-level exposure and will likely drive enhanced internal controls, targeted fraud risk assessments and better MI on higher-risk channels (sales incentives, third-party agents, and digital journeys).
◆ Expect an uptick in self-reports and, over time, more DPAs.
What firms should do:
• Finalise and evidence your fraud risk assessment; ensure it is distinct from AML/ABC assessments.
• Confirm effectiveness of controls across third-party/introducer networks.
• Review escalation pathways; update Risk committees on readiness.
FCA Continues to Simplify Supervisory Communications
The FCA is making it easier for firms to find up-to-date supervisory communications on its website, as part of its ongoing efforts to streamline regulatory interactions. The FCA will label most pre-2022 thematic/multi-firm reviews as “historical” and pivot to periodic market reports instead of broad Dear CEO letters.
◆ The initiative aims to reduce the administrative burden on regulated firms by improving navigation and accessibility of guidance
◆ This development is part of the FCA’s broader agenda to enhance regulatory efficiency and effectiveness
◆ Firms should review their regulatory communication monitoring processes to ensure they’re accessing the most current information
FCA Removes More Data Returns, Helping 36,000 Firms
The FCA is continuing to make data reporting more proportionate by reducing and removing regulatory returns for 95% of all authorised firms. They removed nil-return requirements for REP008 and set out further decommissioning/frequency changes (e.g., REP022, REP009) under Transforming Data Collection.
◆ This change will reduce compliance costs for smaller firms while maintaining appropriate oversight
◆ The initiative reflects a risk-based approach to supervision, focusing more intensive reporting requirements on larger or higher-risk entities
◆ Expect a September update on the wider decommissioning programme (CP25/8).
◆ Use the reprieve to re-focus on data quality where it matters (financial crime, conduct MI, and consumer outcomes) and document rationales for any retired internal reports.
Almost 5,000 Fake FCA Scams Reported in First 6 Months of 2025
Consumers are being warned of fraudsters impersonating the FCA, as the regulator revealed it had received almost 5,000 fake FCA scam reports in the first half of 2025.
◆ The high volume of reports indicates a growing threat of regulatory impersonation scams
◆ Financial institutions should ensure their customer communications clearly distinguish legitimate regulatory interactions from potential scams
◆ The FCA has emphasized the importance of checking the Financial Services Register and using the ScamSmart website to verify regulatory communications
FCA Seeks Boost to Workplace Savings to Help People Navigate Financial Lives
The FCA is providing clarity around workplace savings schemes as part of efforts to improve financial resilience.
◆ The guidance aims to encourage greater participation in workplace savings alongside traditional pension provision
◆ Financial advisers and workplace benefit providers should review their advice frameworks in light of this clarification
◆ This initiative aligns with broader regulatory focus on improving financial outcomes for consumers
Implications: Product governance teams should reassess scheme communications, value-for-money metrics, and Consumer Duty outcomes—especially for lower-income cohorts and update financial promotions and target-market statements.
FCA Announces New Chair of Smaller Business Practitioner Panel
Will Self has been appointed Chair of the FCA’s Smaller Business Practitioner Panel, reinforcing the regulator’s commitment to understanding the perspectives of smaller financial services firms.
◆ The panel plays a key role in providing feedback to the FCA on regulatory proposals from the perspective of smaller businesses
◆ The appointment underscores the FCA’s continued focus on proportionate regulation for firms of different sizes
◆ Smaller regulated firms may benefit from increased representation of their specific challenges and concerns
PRA Developments
Bank of England Publishes Framework for Measuring Banking System Stability
On 29 August 2025, the Bank of England published a working paper titled “Measuring the stability of the banking system: capital and liquidity at risk with solvency-liquidity interactions.” This comprehensive framework represents a significant advancement in how regulators assess systemic risk.
◆ The framework models how liquidity stress affects solvency through confidence mechanisms, reflecting regulatory evolution toward psychological realism in systemic risk assessment
◆ UK banks should evaluate how this methodology will influence future stress testing requirements and regulatory expectations
◆ The framework reflects sophisticated lessons learned from SVB/Credit Suisse collapses, moving beyond traditional risk model separation
Traditional solvency-liquidity separation models proved inadequate during recent banking system stresses, necessitating integrated behavioural modelling approaches.
Implications:
• Counterparty Risk: Banks with inadequate liquidity-solvency modelling face disproportionate regulatory scrutiny, requiring enhanced due diligence frameworks and differentiated counterparty assessment methodologies
• Valuation Model: Traditional DCF approaches become insufficient; behavioural stress factors require integration into bank investment analysis, necessitating sophisticated modelling capabilities
• Systemic Risk: The framework enables sophisticated hedging strategies based on modelled interdependencies previously unavailable to market participants, creating alpha generation possibilities
Bank of England Weekly Report Highlights Emerging Economic Risks
The Bank of England’s Weekly Report published on 27 August 2025 provides insights into current economic conditions and potential risks to financial stability.
◆ The report contains the Bank’s latest assessment of economic indicators and market developments
◆ The analysis offers valuable context for scenario planning and risk management
◆ Firms should review the report for signals about potential monetary policy adjustments
BoE Study Examines Exchange Rate Responses to Tariffs
On 22 August 2025, the Bank of England published a working paper titled “Trading blows: The exchange-rate response to tariffs and retaliations,” examining how currency markets react to trade policy changes.
◆ The research provides analytical tools for managing economic weaponization scenarios, reflecting growing recognition that trade policy represents financial system attack vectors
◆ Financial institutions with significant cross-border exposures should consider implications for sophisticated currency risk management strategies
◆ The findings enable better anticipation of market reactions to geopolitically-driven trade policy changes
Implications:
• Currency Warfare: Traditional FX hedging proves inadequate for managing politically-motivated volatility patterns, requiring sophisticated geopolitical risk modelling
• Supply Chain: Exchange rate volatility from trade disputes creates previously unmodeled correlation risks across asset classes requiring comprehensive portfolio stress testing
• Alpha Generation: Sophisticated quantitative models enable profit optimization from trade policy-driven market dislocations, creating systematic investment opportunities
BoE Releases RTGS and CHAPS Annual Report
On 21 August 2025, the Bank of England published its Real-Time Gross Settlement (RTGS) system and CHAPS Annual Report for 2024/25, highlighting developments in the UK’s critical financial market infrastructure.
◆ The report details operational performance, resilience measures, and future development plans for these critical payment systems
◆ Payment service providers should review the report for insights into upcoming changes to settlement infrastructure
◆ The document provides transparency on how the Bank is managing operational risks in systemically important payment systems
Fund Launches & Capital Raises
Flight to Quality Defines Private Markets
MAJOR FUND CLOSINGS:
Pritzker Private Capital Closes Fourth Fund at $3.4bn
Chicago-based Pritzker Private Capital has closed PPC IV with $3.4bn in capital commitments, surpassing its $3bn target, demonstrating continued institutional appetite for middle-market private equity despite market headwinds.
◆ The oversubscription reflects sophisticated institutional recognition of middle-market value creation opportunities amid public market volatility
◆ The fund size expansion signals Pritzker’s evolution from family office investment vehicle to institutional-scale private equity platform
Neuberger Berman Advances $5bn Secondary Fund
Neuberger Berman is targeting a first close representing half of its $5bn fundraising objective for its flagship secondary private equity fund by year-end 2025, signaling institutional demand for sophisticated liquidity solutions.
◆ The vehicle represents systematic expansion of secondary market infrastructure, creating enhanced liquidity pathways for institutional private equity portfolios
◆ The fund size positions Neuberger among the largest secondary players, indicating institutional recognition of secondary markets as systematic portfolio management tools
Crescent Capital Targets $3bn Credit Continuation Fund: Asset Extension Innovation
Crescent Capital is seeking approximately $3bn for a credit continuation vehicle rolling assets from its 2017-vintage fund, representing evolution in credit fund lifecycle management through continuation fund.
◆ The transaction demonstrates sophisticated asset extension strategies enabling optimal realization timing independent of fund lifecycle constraints
◆ Credit continuation vehicles represent regulatory innovation allowing asset managers to optimize hold periods for credit investments requiring extended workout periods
Mergers and Acquisitions
Brevan Howard Sells Minority Stake to Abu Dhabi's Lunate in $2bn Strategic Partnership
Brevan Howard Asset Management has agreed to sell a minority stake to Abu Dhabi-based Lunate, alongside a $2bn capital commitment to a new investment platform based in the emirate’s Abu Dhabi Global Markets free-zone.
◆ The deal represents one of the largest recent investments in a hedge fund manager
◆ This strategic partnership highlights the growing influence of Middle Eastern sovereign wealth in global asset management
Blackstone Acquires Shermco in $1.6 Billion Energy Transition Deal
Blackstone has announced the acquisition of Shermco in a $1.6 billion deal focused on energy transition infrastructure.
◆ The transaction underscores private equity’s growing interest in energy transition investments
◆ The deal signals increasing private capital allocation to companies supporting critical infrastructure modernisation
BlackRock Launches Venture Secondaries Strategy: Alternative Investment Democratization
BlackRock is preparing to launch its first dedicated venture secondaries fund targeting discounted venture capital stakes.
◆ The vehicle represents systematic institutional expansion into venture secondaries, creating enhanced access for institutional investors to specialized secondary transactions while leveraging BlackRock’s institutional distribution capabilities for market access democratization.
Millennium Backs Ex-Goldman Commodities Head with $1bn Allocation
Millennium Management has provided a $1bn capital allocation to support a new hedge fund launched by a former Goldman Sachs commodities division head, representing significant institutional backing for specialized trading strategies.
◆ The allocation demonstrates institutional conviction in specialized commodities trading expertise amid market volatility
Enforcement Watch
FCA Opens Investigation into Drax Group
Following an announcement made to the market by Drax Group plc, the FCA has confirmed that it has opened an investigation into the company. While specific details remain limited, this represents a significant enforcement action against a major listed energy company.
◆ The investigation highlights the FCA’s continued focus on ensuring market integrity and appropriate disclosures by listed companies
◆ The case may signal increased regulatory scrutiny of environmental claims and sustainability disclosures
◆ Institutional investors with positions in Drax should assess potential portfolio implications and engagement strategies
◆ Energy sector firms should review their market disclosure procedures and controls.
Market Developments
Sainsbury's Becomes Most Shorted UK Stock Amid Price War Concerns
Sainsbury’s has overtaken all other listed companies to become the most shorted UK stock, with hedge funds betting heavily against the supermarket amid mounting concerns over an industry-wide price war.
◆ The positioning reflects growing investor concern about margin pressure in UK retail
◆ The short interest may signal broader investor caution about UK consumer spending outlook
◆ Firms with exposure to UK retail should evaluate potential portfolio implications
Goldman Sachs Offers Wealthy Investors Access to Millennium Management
Goldman Sachs is giving wealthy investors the chance to buy into Izzy Englander’s Millennium Management, one of the world’s largest hedge fund managers, with financial commitments of between $1m and $20m.
◆ This offering highlights the growing trend of democratising access to alternative investments
◆ UK wealth managers may wish to consider competitive implications for their high-net-worth client offerings
◆ The initiative reflects increasing investor demand for access to established hedge fund strategies
BlackRock Urges Increased Hedge Fund Allocations
The BlackRock Investment Institute has recommended its largest-ever boost to hedge fund allocations, advising institutional investors to add up to 5 percentage points more to the asset class compared with pre-2020 levels.
◆ This recommendation from the world’s largest asset manager could influence institutional allocation trends
◆ The recommendation suggests growing institutional confidence in hedge funds’ ability to deliver in the current market environment
◆ UK pension schemes and institutional investors should evaluate the implications for their strategic asset allocation
Regulatory Calendar
2025
• 12 September 2025: PRA consultation deadline for Basel 3.1 market risk framework comments.
• 8 September 2025: EU Commission consultation closes on CRR legislative programmes guidance.
• 7 October 2025: Consultation responses on SMCR reform due to HMT, FCA, and PRA (FCA CP25/21, PRA CP18/25, HMT consultation).
• 8 October 2025: HMT and FCA/FOS consultation closes on financial ombudsman review and on modernising the redress system.
• 30 September 2025: UK Treasury consultation paper deadline for proposals on overseas recognition regime and key UK CRR definitions.
2026
• 1 June 2026: PRA implementation date for most large exposures framework reforms, except removal of internal model methods for securities financing transactions.
• 30 June 2026: PRA modification of leverage ratio requirements ceases to apply (unless earlier revoked).
• Mid-2026: FCA and PRA to publish final SMCR reform policy statements and final rules.
Question of the Week
With the approval of the first PISCES platform and the evolving regulatory landscape for private markets, how should financial institutions balance the opportunities of increased access to private investments against the challenges of investor protection and liquidity risk management?
We welcome your perspectives on this challenge.
Insights: Public and Private Market Converge
The approval of the LSE’s PISCES platform is a shift in the UK’s approach to capital markets regulation. As regulators seek to balance growth objectives with investor protection, we’re witnessing the emergence of a more nuanced regulatory continuum rather than a binary public-private distinction.
For issuers, the lure is liquidity without the full IPO burden. But intermittent prints will still echo through valuations, employee options, and fund NAVs. Compliance teams must treat PISCES activity like a shadow-MAR environment: wall-crossing records, CDD on counterparties, and clear disclosure controls for any statements that might move indicative prices.
For asset owners, price discovery reduces model risk—but invites questions about fair-value methodologies. Expect the FCA to watch conduct, conflicts, and retail exposure closely as workplace savings and private-market access expand in parallel.
The ability to access growth-stage companies earlier in their lifecycle must be balanced against appropriate disclosure standards and liquidity considerations. This convergence trend is likely to accelerate as other jurisdictions develop similar frameworks to compete for growth capital.