Long-Term Stock Exchange opens for business
BY Yaelle Gang | September 17, 2020
A new stock exchange aimed at serving companies and investors that share a long-term vision has opened its doors.
The Long-Term Stock Exchange will trade U.S. exchange-listed securities for companies that publish and maintain a series of policies designed to provide shareholders and stakeholders with insight about their long-term strategies, practices, plans and measures.
“A big part of the reason that we created this was that we really think if you bring a market down to its bare fundamentals, what were markets originally created to do? To bring together investors and companies. And we’ve gotten pretty far away from that in a lot of market places,” says Michelle Greene, president of the LTSE. “We’re really trying to get back to that, where you can take investors . . . [and] companies that really care about long-term success and align them again, so that they can work together to build those long-term visionary companies.”
The companies listed on the LTSE must publish and maintain a series of policies based on five underlying principles: that long-term companies consider a broad group of stakeholders; measure success in years and decades; align compensation for executives and directors with long-term performance; engage and grant directors explicit oversight of long-term strategy; and engage long-term shareholders.
“We created the Long-Term Stock Exchange because we really felt like today’s public markets have become overly short-term focused and there’s really a lot of short-term pressures and we wanted to counteract that,” says Greene. “We decided to create an exchange that really is run by a different set of rules and it’s focused on companies achieving success over the long term and redefining success to be not about quarterly [earnings per share], but really about how the company performs over a much longer time period.”
With a mind to shifting the narrative about metrics of success, the LTSE aims to provide an alternative exchange on which companies can be listed.
So far, the LTSE has no listings because it was only allowed to accept applications when it went live last week, Greene says. “But in terms of the types of companies that we would expect to list, it really is companies from a wide array of industries and geographies and sectors. What they have in common is that they are companies that are long-term focused.”
Currently, the new exchange is targeting dual lists, she adds. “That’s our initial strategy, so companies do not need to leave their incumbent exchange if they’re already listed; they can dual list with us. And the reason that we took that approach is because, what we’re trying to do is influence company behaviour by having a different set of listing standards and if you dual list or primary list, you have to obey that set of listing standards.”
Now that the exchange is live, Greene says it’s time to see if it has the intended impact. “We’re excited to move on finally to this next step of actually engaging with the companies and investors and bringing them together.”