The Long-Term Stock Exchange was founded to be an attractive option for new companies to raise capital while keeping their focus on long-term instead of short-term results. Fewer new companies have been making IPOs in the last 20 years, and executives in charge of recent IPOs have increasingly been burdened with problems caused by short-term investors. The new exchange imposes additional rules on listed companies and their investors, besides the rules required by law and traditional exchanges. Because these additional rules are imposed by an exchange, they can be enforced by existing mechanisms at the U. S. Securities and Exchange Commission.
History
Founding
proposed a Long-Term Stock Exchange, among other ideas, in his 2011 book The Lean Startup. After several years of some financial reforms but no one else appearing to champion the concept, he began organizing an LTSE himself in 2015.
SEC approval
LTSE filed an application to the Securities and Exchange Commission for registration as a national securities exchange on November 30, 2018; it was approved on May 10, 2019. In its ruling to approve the application, the SEC noted that it had received one comment objecting to LTSE's registration because of its proposed rule concerning corporate governance of listing companies that does not require "one share, one vote". In reply, the Commission noted that the proposed rules were substantially similar to those at other national exchanges, such as requiring the independence of most directors, committees for audit and executive compensation, and codes of conduct. But the Commission stated that there is no requirement for "one share, one vote", as long as no existing shareholders are disenfranchised. The Commission also noted that the application did not include any provisions for "time phased voting rights", which would have to be approved separately as a proposed rule change in the future. The exchange anticipates being ready to accept listings and start trading sometime in 2019.
Exchange features
Operating principles
In an earlier SEC filing, LTSE said that its corporate governance rules might include: increased voting rights for shareholders who hold company stock for long periods of time, restrictions on offering short-term incentives to executives, disclosure of impact of any stock buybacks, and requiring companies to have a board-level long-term product and strategy committee.
