Putting the ‘Long Term’ in LTSE

If you read LTSE’s recent application to the Securities and Exchange Commission for registration as a national securities exchange, you may notice that it includes a set of listing rules virtually identical to other exchanges.

The filing is a first step to enable LTSE to become a national securities exchange. We also expect to file listing standards that are designed to enable companies to thrive over the long term.

“Our vision is that when companies list on the LTSE, they adopt a set of corporate governance principles that bring them into closer alignment with their long-term investors,” explains Eric Ries, LTSE’s founder and CEO.

Though we expect to file such standards soon — the timing will depend on how the regulatory process plays out — you can read a version of those standards right now.

Last June, the staff of the SEC approved a set of LTSE-designed listing standards filed by IEX as part of a partnership that we pursued in parallel with building a stand-alone exchange. Although the filing was withdrawn while a stay was still in place, you can see the staff’s reasoning for approval in its order.

The long-term listing standards comprise a set of practices that aim to enable companies to focus on building their businesses, achieving scale, and advancing their visions while meeting the needs of shareholders and society.

The standards are designed to enable companies to focus on building value over time by, for example:

▪ Publishing leading indicators of future growth

▪ Limiting the emphasis on quarterly predictions

▪ Differentiating between long-term and short-term shareholders, and allowing long-term shareholders to have more of a say

▪ Linking executive pay to performance over as long as 10 years

▪ Requiring that companies detail strategies for the long term, including investment in things like research and training

Though LTSE’s investors include leaders in the technology industry, we are building an exchange designed to encourage companies from every industry to go public in a different way.

The listing standards reflect hundreds of discussions and input from current and prospective issuers, investors, broker-dealers, exchanges, and policymakers. Each has their own views, but there is consensus around both a need for more long-term thinking in the public capital markets and a need to make the markets work for all participants.