A new US exchange – the Long-Term Stock Exchange (LTSE) – has been approved by the SEC.
Designed for high-growth tech companies with long-term prospects and investors that understand startups, the San-Francisco-based LTSE has big ambitions: to allow startups to list on the public market while focusing on research, to let long-term investors cash in on fast-growing startups and to provide the tools to support both parties.
It is arguably the second point that is the platform’s most distinctive proposal: a focus on long-term voting rights, whereby shareholders will be granted more voting power the longer they own a stock.
To achieve this, LTSE requires that companies reward their executives based on long-term goals over short-term profits and to disclose long-term plans and investments.
The exchange idea was created and put to the SEC in November by technology entrepreneur and startup adviser Eric Ries, who has been developing the idea for some time having raised $19 mn from venture capitalists to get his project off the ground – but a thumbs-up from the US regulator was needed to launch the exchange.
‘We are building a market where companies are rewarded for choosing to innovate, invest in their employees and seed future growth, where companies can run their businesses with the stewardship that similarly aligned shareholders, stakeholders and society demand,’ says Ries in a statement.
LTSE’s next step is to submit its listing standards to the SEC. It becomes the 14th equity market in the US. Stock trading in the country is dominated by markets run by the NYSE, Nasdaq and the Chicago Board Options Exchange, which together account for more than 60 percent of volume.