The FCA’s Pisces framework risks encouraging FOMO investing. Today marks the introduction of the regulations governing the Private Intermittent Securities and Capital Exchange System—referred to as Pisces. This initiative aims to create regulated markets that enable companies to unlock liquidity without undergoing an IPO. However, there is a concern that these markets may fuel the ongoing trend of FOMO (fear of missing out) investing.
Investors are often driven by FOMO, as seen in the case of Wework, which reached a $47bn valuation in 2019 only to file for bankruptcy four years later. Similarly, the rise of generative AI has prompted frenzied competition, exemplified by Builder.ai, which became a unicorn with investments from Microsoft and Qatar’s sovereign wealth fund but has now entered administration amid inflated sales figures and misrepresented technology.
FOMO-driven investment decisions can result in substantial losses, often due to insufficient due diligence by investors. This concern extends to Pisces, where shareholders can sell shares without the detailed information required for an IPO. Shares are auctioned to qualified investors within a set timeframe, potentially leading to reckless bidding reminiscent of an Ebay auction standoff.
This system poses valuation risks, either inflating or undervaluing companies, affecting investors and company owners alike. Inflated valuations can influence further deals, pushing sectors into bubble territory. To drive liquidity and stimulate growth, the UK economy needs bold solutions beyond limited pools, embracing innovative thinking for meaningful change.
Carrie Osman is founder and CEO of Cruxy.
