
U.S. regulators approve the Long-Term Stock Exchange - yahelc
https://www.reuters.com/article/us-usa-sec-siliconvalley/u-s-regulators-approve-new-silicon-valley-stock-exchange-idUSKCN1SG21K
======
eries
Hey everyone, Eric Ries here, founder and CEO of LTSE (and also you may
remember me from such roles as the Lean Startup guy). Day one of approval has
been kind of exhausting with all the attention but I wanted to stop by this
thread and say hello.

Have questions? Happy to answer as best I can. Keep in mind that this is a
highly-regulated startup so we are sometimes limited in what we can say
publicly. I’ll do my best to give you a straight answer if I can.

Thanks for all the support over the years, this project has been a true
community effort,

Eric

~~~
divbzero
Thank you for driving innovation in equity markets! We need more focus on
long-term capital allocation, and less on the casino aspect of stock prices.

Have you considered incorporating some form of _low-frequency_ trading? With
an auction for shares held once a day, once a month, or even once a year?

(I have heard Warren Buffett say that, if it were possible, he would prefer if
investors could buy or sell Berkshire Hathaway shares only once annually at a
price close to intrinsic value. The low frequency would encourage investors to
focus on understanding businesses instead of short-term price movements.)

~~~
eries
Yes

------
drawkbox
Engineers, product focused entrepreneurs and innovators would like a Long-Term
Stock Exchange (LSTE) quite a bit if it works out.

Usually to list on public markets the whole
bizdev/marketing/operations/VC/board/lawyer/executive machines end up taking
most companies away from innovation and the founders, as well as taking large
chunks of the company and the rewards, where the efforts become clouded in
power struggles.

If the LTSE market helps stop short and distort, pump and dump schemes, it
could be very attractive to long term investors and innovative/engineering
focused companies. A company like TSLA or a company rebuilding like AAPL in
the 90s would probably love to be in a longer term, less short term focused
exchange. The new market may encourage deeper dives for innovation and protect
the companies on the exchange from the eviscerating games of the public
markets where long term investors get skimmed and are 'suckers' to the big
fish.

LTSE is a very welcome direction and attempt to clean up the public markets
problems including the short term quarterly focus, high bar for entry,
constant attacks after going public and loss of power/percentages by founders
and innovators/engineers/product once the company goes public.

~~~
eries
Thanks!

------
evrydayhustling
Anybody have a good, technical/professional doc on how the LTSE mechanisms
work? Some of this seems crazy, but smart people have looked at it.

Example: It seems like stock transfer would reset voting rights, which should
depress prices and (intentionally, I think?) discourage sale. But what keeps a
fund that owns vested shares from effectively selling their economics _and_
voting rights through a secondary contract?

~~~
Animats
Here's the exchange rulebook.[1] This is rather long. I haven't found the
"long term" part yet. It appears to function as an ordinary short-term
exchange. It's not like stocks trade once a minute or once an hour to
eliminate high-speed trading. They allow day trading and margin.

There have been proposals for exchanges designed to discourage short term
churn, but this doesn't seem to be one of them.

The web site seems unhelpful. Not much solid info.

[1]
[https://longtermstockexchange.com/regulation/docs/LTSE%20Rul...](https://longtermstockexchange.com/regulation/docs/LTSE%20Rulebook.pdf)

~~~
ianai
Fta:”The new exchange would have extra rules designed to encourage companies
to focus on long-term innovation rather than the grind of quarterly earnings
reports by asking companies to limit executive bonuses that award short-term
accomplishments.

It would also require more disclosure to investors about meeting key
milestones and plans, and reward long-term shareholders by giving them more
voting power the longer they hold the stock.”

~~~
EnderViaAnsible
I don't blame our OP for wanting more information. Certainly anything
trumpeting the zeitgeist or offering a suspiciously tuned Worry De Jour should
be evaluated carefully. (That is, it's obvious that "we want to fix short term
ism in the stock market" will be a popular and marketable idea, whether that
is the intention/actual end result or not.)

Even in the parts you've quoted, the language seems very careful.

They'll "ask" businesses not to give huge executive bonuses, but asking is
free and non-binding. A large portion of the American public has been "asking"
for this for a long time. Is the problem really that no one has asked?

They'll require "more information" about key milestones and plans for
investors, which sure, that's nice for investors, or will be if it's more
information than is usually given by CEOs to a board, which I doubt.
(Investors already demand to know what the plan is, and even startups usually
have plans for several years out even if they're goals more than plans.)

But is that actually the problem that causes short term ism? Are we
insinuating that investors love long term investments and the only reason they
don't make them is because CEOs don't tell them enough?

Etc. Now, maybe these worries are invalid, and the actual charter does
actually prescribe effective regulations to solicit the desired behavior.

But to confirm that, we will need more information than the vague assertions
provided in the article. Which is why our OP was trying to investigate the
source documents.

(Also, doesn't it seem odd that a medium length article about an exchange's
sole reason for existence contains almost no information about _how_ that
exchange intends to achieve the reasons for which if exists? Just assertions
that it will do so with all language carefully qualified?)

~~~
EnderViaAnsible
I think I'd add that my concerns aren't just, or even primarily, that they are
trying to do something nefarious.

Rather, I tend to view issues as having a certain amount of public mindshare,
and the success or failure of initial attempts at a solution tend to have an
outsized influence on public willingness to assign resources to a problem.

So I think that if this is a poorly implemented solution, and fails, we may
not try again for some time, even if the actual idea is perfectly workable.
Since I also agree that this short term...uh...ism...is a genuine problem, I
would very much like to see a successful solution to the trouble.

And I do mean the traditional public: this problem of poor implementation
scuttling perfectly good ideas also afflicts the efforts of for profit
corporations as much as it does democratically controlled public servants or
charitably beholden non-profits.

------
tmugavero
Excited to see this. I hope it leads to a trend to listing sooner and giving
access to retail investors much earlier. Buying Uber at a few dollars instead
of $42 for example. The markets will operate like they want to unless there
are explicit rules to stop it. Right now it's wait to IPO as long as possible,
and HFT only accessible to huge companies. Retail is left with the scraps.

~~~
mises
Retail is left with "the scraps" because it is much riskier to invest early
on. Companies that fail early aren't heard about as much, because Joe
Average's pension plan hasn't invested in them, but are still plentiful. And
maybe Joe Average's pension plan shouldn't be investing in what are
effectively PE-stage firms.

I don't know if I'm right about this, but it seems such an exchange might
contribute to something like 2008. Then, it was the common man investing in
over-heated real estate; now, it could become the common man investing in
over-heated tech.

I feel like those who work in tech often forget that it can fail, have cycles
of boom and bust, etc. like any other industry.

Of course, I do think it can serve a useful purpose, but there is reason
early-stage, private investment is restricted to qualified investors.

~~~
bufferoverflow
A Joe Average is legally allowed to walk into a casino and lose all his money,
pretty much guaranteed over long term.

A Joe Average is legally allowed to play all kinds of lotteries, pretty much
guaranteed loss over long term.

A Joe Average is legally allowed to invest his 401k in the riskiest penny
stock one can find.

This has nothing to do with risk, it's 100% gate keeping.

~~~
trophycase
Yep, penny stocks, options and margin trading are all available to a retail
investor. But hey, I want to invest in a new business? I want to buy Bitcoin?
I want to participate in an ICO? Sorry. It's all about gatekeeping and not
letting me do what I want with my money.

~~~
verall
I don't like the gate keeping either but so called "entrepreneurs" would just
go around washing people. The point is that you have enough money so no-one
cares that the space mining company you invested in only hires website
designers. Pumping penny stocks is illegal, but when it wasn't, salespeople
were washing people.

------
jorts
To be a company that's operationally mature enough to list on an exchange
they're likely of the size of a company that could IPO on NYSE or Nasdaq. I
don't think this will suddenly allow a flurry of startups to suddenly become
public on a different exchange.

~~~
miohtama
What is a flurry startup and what is a mature company is relative.

For example, Amazon originally IPO'ed in 1999 after raising only 10M USD.

Especially since the last financial crisis over regulation has hindered SMEs
access to the public markets. Being a public company means that you can often
raise money on better terms. If only large enterprises can access good money,
then SMEs and indirectly innovation is hurt.

EU has realized this and is now trying to make SME listing easier (mostly
through de-regulation).

> Currently, out of the 20 million SMEs in Europe, only 3,000 are listed on
> stock-exchanges. "We want to change this," said Valdis Dombrovskis, EC vice-
> president responsible for financial services: "We propose rules that will
> make it easier for SMEs to access to a wide range of funding at all stages
> of their development and to raise capital on public markets."

[http://europa.eu/rapid/press-
release_IP-19-1568_en.htm](http://europa.eu/rapid/press-
release_IP-19-1568_en.htm)

[https://www.eubusiness.com/news-eu/sme-
financing.24fl/](https://www.eubusiness.com/news-eu/sme-financing.24fl/)

~~~
adventured
> For example, Amazon originally IPO'ed in 1999 after raising only 10M USD.

Small correction, Amazon's IPO was in May 1997. The $10m in venture capital is
correct though ($2m common, $8.2m preferred).

They of course had a relatively small business, which matches with the $10m in
VC and times. $15.7m in sales for fiscal 1996. Their sales ramp is impressive
considering the Web at the time: $875k in 1Q96, $2.2m in 2Q96, $4.1m in 3Q96,
$8.5m in 4Q96, $16m in 1Q97.

They raised $50x million in the IPO, and had a $560 million valuation at the
end of the first day of trading.

Their S1:

[https://www.nasdaq.com/markets/ipos/filing.ashx?filingid=124...](https://www.nasdaq.com/markets/ipos/filing.ashx?filingid=1244088)

~~~
eries
I cite this fact all the time when talking to people about how capital markets
have changed dramatically. But even I find it hard to remember the actual
numbers. They are so mind boggling by modern standards. It wasn’t that long
ago!

------
carlosdp
> And the Council of Institutional Investors has argued (pdf) that LTSE’s
> voting mechanism could hurt shareholders by giving too much power to
> founders.

I mean, the most high-profile tech stocks to hit the market as of late already
give all the power to founders via voting class stock, so I don't think it's a
big change other than truly standardizing it.

------
nerdponx
_The new exchange would have extra rules designed to encourage companies to
focus on long-term innovation rather than the grind of quarterly earnings
reports by asking companies to limit executive bonuses that award short-term
accomplishments._

And what are those rules? Nowhere in the article does it actually say what
this actually is.

~~~
eries
Stay tuned. This initial approval is for the base set of listing standards
that are similar to other exchanges (that’s just how the process works). Over
time we will add more, but we can’t share the details until we get further in
the regulatory process.

------
hamandcheese
The title of the story is “U.S. regulators approve new Silicon Valley stock
exchange”

Despite the actual name of the exchange, the title of the article seems much
closer to how the exchange is described:

> The LTSE is a bid to build a stock exchange in the country’s tech capital
> that appeals to hot startups, particularly those that are money-losing and
> want the luxury of focusing on long-term innovation even while trading in
> the glare of the public markets.

From the HN guidelines:

> Otherwise please use the original title, unless it is misleading or
> linkbait; don't editorialize.

------
fallingfrog
Why don’t we just levy a 5% tax on every stock trade? That would provide a lot
of funding and also get rid of front running, flash crashes, and a lot of
kinds of market manipulation in a hurry. It would also make sure that any
stock trade was with the intent of making longer term investments.

~~~
the_pwner224
HFT and front running is a plague upon the markets, but there are already
effective ways to stop it (order batching, and time delays like IEX does). The
only reason it even exists is because the exchanges make tons of $$$ from
selling access to the HFTs.

On the other hand, day traders provide valuable liquidity to the markets,
making them more efficient and better for everyone. They ability to operate
would be severely harmed with even a 1% fee on every trade. And more fees also
harm normal people like me, who conduct trades that generally last from a few
days to a few weeks each. For the most part, we're not harming other people,
and we make the markets more efficient and legitimate.

The weird market effects are enabled by what is basically corruption by large
entities involved with the markets, and by the ineffectiveness of the SEC at
fighting a wide range of anticompetitive practices. They are caused by people
who are making a small amount on every trade, but not all of the people making
a small amount on every trade are bad.

~~~
fallingfrog
Personally I think that there is such a thing as _too much_ liquidity, and we
are at that point now. It certainly undercuts the power of the workers in a
region if its that easy to pull money out, but the people can’t leave. So the
holders of the capital have all kinds of leverage (they can pull their money
out in a nanosecond) but the people have none (they are stuck where they are
and must take what they can get).

------
dmix
> emphasize governance standards like sustainability, executive pay, and
> diversity

What would a company gain by choosing to list on here (over other far more
established options) while having to commit to these additional rules? Access
to a group of investors who don't complain too much about quarterly profit
objectives?

~~~
logicx24
And a group of investors who don't complain about founders retaining majority
voting power.

~~~
slg
Which probably isn't an issue for retail investors. Retail investors are
already unlikely to have much actual power and I would bet a majority of them
never actually participate in any voting. I can't speak for everyone in that
situation, but I know I would be perfectly happy to forfeit my stockholder
voting rights if it meant I got some more assurances that a company was being
held to some higher ethical standard.

------
bethly
We are thrilled that the SEC has officially approved the Long-Term Stock
Exchange as a national securities exchange!

~~~
jayp
I am happy for LTSE.

The article doesn't explains what makes LTSE different than NYSE? How will it
actually encourage looking beyond the next quarter? Where can one learn about
that?

~~~
segmondy
It's designed for long term investing. Not a place for day traders, high
frequency trading and all sorts of sharks and piranhas that like to eat up
pensions and 401k funds...

~~~
jstanley
How exactly do you believe high-frequency traders "eat up" pension funds?

The only time any limit order gets executed is when it is the best price
available. From the other perspective, the price a market order is matched at
is the price of the best limit order available.

In the absence of high-frequency traders, the best price available will be
_worse_ , not better.

~~~
wcoenen
Example of how HFTs would "eat up" money, at least in the past: many
instruments trade on multiple exchanges. So when a trader wants to execute
what is conceptually a single large order, in practice this order may need to
be split and routed to multiple exchanges.

HFTs will see the first order executing on one exchange, and will then jump in
front of the rest on the other exchanges. For the trader it looks like large
orders don't work; he can't buy every offer that's on his screen. Only part of
his order works, and a price rise prevents the rest from executing.

Nowadays this may be less of a problem, because large traders now probably all
use software that tunes injected latency to make all related orders arrive
simultaneously at their different destinations. But I would still be careful
about assuming that HFTs can't do any damage anymore.

~~~
jstanley
The HFT can't just know that you're going to place a market order, and then
jump in front of all of the other limit orders that you're going to match
with, without offering a _better_ price than the other limit orders.

The only way that _could_ work is if the lowest price you can buy on exchange
A is $100, and the HFT knows that you're about to submit a market order, so he
buys up the $100 orders until the best price is $101, and then he lists what
he bought for sale at $100.99, which your market order matches against. OK, in
theory this works.

To avoid this, you can just submit a limit order at $100 instead of a market
order. You should always use limit orders for exactly this reason, anyway:
even in the absence of foul play, the order you're trying to match against
might get matched by someone else in the mean time and you could get a worse
price than you expect.

------
jazilzaim
With dual class shares lacking accountability and leading to corruption among
founders, founders and investors clashing over dual class or multi class
shares, and allowing a sense of corporate loyalty to appear among founders who
run companies with dual class shares, I do see a good sense of demand for
tenure voting. With increasing calls for banning dual class shares and the
scandals at Facebook and Google shining light on the dictatorship held
companies by founders, we will see regulators and many retail and
institutional investors become aware of dual class shares and either regulate
or ban them. So tenure voting is the best way to go!

I think that tenure voting is the next step forward and it is a good way to
attract an alignment between investors and founders as well as employees since
they get incentivized with more votes for holding a stock long term. We've
seen this work really well in France especially with companies like LVMH that
investors are patient towards due to this tenure voting incentive.

But like how dual class stock caught on with startups starting with Google and
Facebook, can we see the same for tenure voting if there are hot startups in
the future with this structure?

Will LTSE allow dual class or multi class share structures or only tenure
voting among companies wanting to list on the exchange?

Also will all sorts of companies be able to do this or will LTSE only be open
to tech companies?

------
hellllllllooo
I don't really see how the rules mentioned will change things that much.

> asking companies to limit executive bonuses that award short-term
> accomplishments.

Why would I care as an investor? I still want the stock to go up quickly.
Executives own stock and without a cash bonus wouldn't this incentive trying
to get quick increases in stock value.

> more disclosure to investors about meeting key milestones and plans, and
> reward long-term shareholders by giving them more voting power the longer
> they hold the stock

Seems relatively minor vs the benefits of a stock jumping significantly in a
short time. As a minor stock holder I have no interest in voting power. There
still isn't a downside to short term deals.

~~~
im3w1l
People worry that execs game the metrics investors use to evaluate stock. To
give an example close to home, imagine if tech companies were evaluated by how
many lines of code they produce per quarter. Now people are scared that execs
will tell people to just write a bunch of whatever.

Making the company look good on paper (short term stock gains) but actually
worse (perform worse in the long term as those lines don't translate to
profit). But when these hidden faults are discovered the execs are long gone
and their bonus checks already cashed.

~~~
hellllllllooo
I agree. I just don't understand how the rules described in the article
actually incentive it. I get that they're small step towards it but they don't
seem enough.

------
integrate-this
I remember when a bunch of nobel prize winning economists founded "Long-term
Capital Management" on the theory that, because they only traded relative
value arbitrage, they couldn't lose money. Then they levered the strategy
without realizing that these value arbitrages could shift against them and
result in additional margin requirements. Those were the smartest people in
finance at that time, and they nearly took down the world's financial system.
The only real similarity here is the "long-term" name, but I don't think that
anyone with a true understanding of capital markets would name their firm
"long-term" after that fiasco.

~~~
sayrer
so, your argument is that using the phrase "long-term" is forever poisoned?

doesn't seem super strong.

~~~
integrate-this
The equivalent would be an architect naming their new building project 'the
world trade center'. A lot of people just aren't going to touch it because of
the image it evokes. LTCM nearly broke the world's financial system and I
don't think that's an exaggeration. Naming a firm LTSE is a good way to make
sure a lot of people won't want to work with you.

------
natureboy21
Having been exposed to the shell games that go on at a large corporation, I
think this could be really good.

If this is actually executed properly, I think this could be a good exchange
for more than just tech start ups.

~~~
eries
I think so too :)

------
bk8335
I couldn't see it in the reuters article so apologies if this is no longer
relevant. Is the plan still to give different number of votes depending on how
long the shares have been held? If so, wouldn't selling your shares you've
held for a long time destroy value i.e. by resetting the votes to zero? Also,
if different shares have different values, would they each have different
prices, or would the listed price be some weighted average?

~~~
eries
I can’t share our future plans until we file with the regulators. It won’t be
exactly the same as what we filed and won staff approval for last year, but
that filing can give you some sense of how possible rules could work:
[https://www.sec.gov/rules/sro/iex/2018/34-82948.pdf](https://www.sec.gov/rules/sro/iex/2018/34-82948.pdf)

Note that this particular system does not have either of the problems you
raise as questions

------
rb808
I can imagine some kind of OTC exchange where people dont have to worry about
Sarbane-Oxley and other SEC rules as being useful. Is this what it will be?

If you have to comply with SEC and the CEO can't post jokes on twitter, I dont
really see what advantage there is over NYSE or NASDAQ.

~~~
elliekelly
The SEC has jurisdiction over all publicly-traded companies and exchanges and
will have the same authority over LTSE as they do NASDAQ & NYSE.

And SarbOx has nothing to do with CEO tweets... a CEO can’t provide materially
misleading information to shareholders or potential shareholders. Period. Not
on twitter, not on TV. Not in the rain, not on a train.

------
guesto
Congrats Eric and the team!

What does the ideal LTSE "customer" look like? IOW, what are the signals or
attributes of a company that would be a great fit for considering an LTSE
listing?

------
reasonablemann
I think it's worth it to allow this but I fail to see it's true relevance. If
companies don't innovate sufficiently for the long term they will die to other
companies that do. Hence the market takes care of itself.

~~~
maxander
Shareholders aren’t incentivized to act in the company’s long-term interest;
only to maximize apparent growth for as long as they hold the company’s
shares. This leads to companies making shortsighted moves that aren’t in their
long-term interest, due to shareholder influence.

~~~
eries
It’s astonishing to me how clear this is in the research literature:
[https://corpgov.law.harvard.edu/2019/04/30/short-term-
invest...](https://corpgov.law.harvard.edu/2019/04/30/short-term-investors-
long-term-investments-and-firm-value-evidence-from-russell-2000-index-
inclusions/)

------
atemerev
Kind of bad luck — naming anything in finance “long-term”. It attracts the
attention of quite a few angry gods to smite you.

Some of us still remember what happened with LTCM — “Long-Term Capital
Management” hedge fund, who was heralded back then as the pinnacle of
innovation. It was back in 1998, which looks like eternity for Silicon Valley
types... but some remember.

Naming a financial entity “LTSE” is inviting trouble.

------
rhacker
Will any capital use it if they know the short term exchanges are available?

~~~
sanxiyn
I think the idea is that capital wants to invest on stock of company X, which
is listed on LTSE, so capital grudgingly accepts LTSE rule.

------
husamia
This is great news. Congratulations. How are you going to help companies and
their investors define performance for the long term in this new age?

~~~
eries
As the old saying goes, “very very carefully.”

Just kidding. We will make extensive filings on this subject, coming up soon.

Until then the best way to think about this is as a set of principles.

This next generation of companies believes in \- defining success in
generational terms, not beating the quarter or some transient competitor \-
considering their impact on multiple stakeholders: shareholders, yes, but also
employees, partners, customers, communities \- building products that are
fundamentally healthy for humans and the societies they inhabit

------
caprese
Is this more than a Regulation ATS approval?

If this is a national stock exchange, then that would be fitting for silicon
valley and California. If bankers here would like to take other parts of the
transaction for IPOs and direct listings it could really be a boon for the
state and remove a lot of the pressure from New York investment banks, as
California is economically larger than other most countries with relevant
financial centers. On many lists, California is only in 5th place GDP
worldwide because the United States as a whole is above it and double counts
California.

~~~
hendzen
nope this is a real national securities exchange approval:
[https://www.sec.gov/rules/other/2019/34-85828.pdf](https://www.sec.gov/rules/other/2019/34-85828.pdf)

------
djferran
Eric, Congrats man! What unbelievably good news for the planet. I have been
telling anyone who would listen for the past year that the LTSE simply HAS TO
HAPPEN!!! You have the solution to the currently flawed version of shareholder
focused capitalism. Now, all stakeholders can enjoy the ride. When you get a
chance check out: TorreyProject.org to see how we are going to use LTSE to
change the world.

------
dickeysingh
Eric, Could companies listed on NYSE and Nasdaq eventually move over (not dual
list) to LTSE? If so, what does such road look like?

~~~
eries
Yes, they will be able to do so (this is called a transfer in Exchange
parlance). We support this in addition to dual listing.

------
conanbatt
I think there is big potential value in a new exchange that optimizes for
cheap IPO'ing rules. Something between Nasdaq and Wefunder.

I'm not persuaded by some of the ideas they have (like adding diversity to
their governing board, seems designed to be exclusive to tech-startups that
already have a bias toward that "value"). But if only by competition they make
listing cheaper and easier it could have a big impact.

~~~
memmcgee
>I'm not persuaded by some of the ideas they have (like adding diversity to
their governing board, seems designed to be exclusive to tech-startups that
already have a bias toward that "value").

What on Earth does this mean?

~~~
AsyncAwait
I strongly suspect the parent is one who buys into the James Damore thing of
companies adding diversity for the sake of it and the like...

~~~
conanbatt
I can see you preach tolerance.

------
nimish
Does listing on ltse absolve the company ofthe standard rules around going
public like Sox compliance?

~~~
eries
No

------
hendzen
here is the SEC filing:

[https://www.sec.gov/rules/other/2019/34-85828.pdf?mod=articl...](https://www.sec.gov/rules/other/2019/34-85828.pdf?mod=article_inline)

question to LTSE employees: do you plan to host your matching engine in
California?

~~~
eries
We will share more details on the technical implementation soon.

------
thekhatribharat
This is a silicon valley exchange, silicon valley VCs can't compete with
multi-billion dollar "vision funds" so they'd use retail investors to drive
their moonshot bets. Silicon valley startups would get a much better deal with
an IPO on LTSE than a private deal with vision funds.

------
masudrhossain
How does this differ from the OTC market?

------
immichaelwang
What are the downsides of this?

~~~
xiphias2
It looks like founders and VCs get the majority voting shares by default. It's
not clear if it's good for the company or not, but it helps founders to pick
it as the stock exchange to go to.

The slow vesting shedule makes a lot of sense though.

~~~
dmak
Where did you read about the slow vesting schedule

~~~
xiphias2
[https://www.cnbc.com/2019/05/10/sec-approves-new-silicon-
val...](https://www.cnbc.com/2019/05/10/sec-approves-new-silicon-valley-stock-
exchange-backed-by-marc-andreessen-other-tech-heavyweights.html)

The interview with Eric Ries is a bit clearer than the article, but it still
misses a lot of details.

------
crazygringo
Any investor who limits themselves to the "long-term" is doing nothing more
than allowing execs to get away with bad behavior.

There is absolutely zero evidence that current stock prices don't price in the
long-term. Indeed, if there were, savvy investors would arbitrage for that...
and then it would no longer be the case. This is pretty much by definition,
just Econ 101. (Also, somebody who thinks stocks are biased to the short-
term... please explain AMZN's valuations over the past two decades.)

The _only_ people calling for limiting investor ability to sell are executives
of companies themselves, who are afraid of accountability from investors.
Because sometimes CEO's would rather be lazy or work on their fun (yet
unjustifiable) pet projects, than actually build a profitable, sustainable
business like investors want. (It's just human nature.)

A "long-term stock exchange" is one of the greatest cons ever played by execs.
It is good only for management, at the expense of investors, customers, and
everyone else generally. It is simply the removal of accountability, which can
never be a good thing.

~~~
LgWoodenBadger
Doesn’t that same accountability today result in execs selling out the long-
term for short-term gains, also for their own benefit at the expense of
shareholders?

~~~
crazygringo
That's certainly a tricky question which essentially is connected to their
"insider information", but the answer certainly doesn't rely on limiting
_others '_ ability to sell.

Solutions to that generally involve long-term vesting periods for _executive_
shares, e.g. executives can't sell their shares for some extended period of
time that is sufficiently "long-term". If the board really made sure
incentives were aligned, ideally it would be some period of years _after_ they
left the company, so they could never sell while they were in a position to
influence the value of shares.

But again, there is absolutely _zero_ reason that should ever apply to someone
without insider information, i.e. investors generally.

