Silicon Valley just got a new stock exchange: The Long Term Stock Exchange
Congratulations. It's a beautiful healthy... platform for securities trading. America just birthed its 14th stock exchange, the uncreatively named Long Term Stock Exchange. LTSE is just as regulated as siblings New York Stock Exchange and Nasdaq (it was approved by the SEC Friday and expects to open this year), but it's mission-oriented: It wants to fix "short-termism."
Quarter's over. On to the next quarter... Currently, public companies must calculate, prep, and announce their earnings reports every three months. Focusing on short-term results only benefits short-term focused traders — Hedge funds and activist investors. Instead, LTSE introduces 3 rules to encourage long-term thinking:
- Seniority-based voting: Older shares get more voting power. So the more in it for the long haul you are = the more power you have as a shareholder.
- Tie exec pay to long-term metrics: Limit CEOs from floating away on golden parachutes.
- No forecasts for quarterly earnings: None. Investors should care about 3 years, not 3 months.
This is Silicon Valley's farm for unicorns... You've seen the volatility of recent tech IPOs Uber, Lyft, and Pinterest. Long Term Stock Exchange wants to give companies the benefits of public markets (raise $$, trade your stock!), while cutting the negatives (no sacraficing long-term health for short-term profits). It's crafted for Silicon Valley's finest.