US Regulators Approve New Silicon Valley Stock Exchange (reuters.com) 45
An anonymous reader quotes a report from Reuters: U.S. regulators on Friday approved a new stock exchange that is the brainchild of a Silicon Valley entrepreneur, a move that will give high-growth technology companies more options to list their shares outside of the traditional New York exchanges. The U.S. Securities and Exchange Commission approved the creation of the Long-Term Stock Exchange, or LTSE, a Silicon Valley-based national securities exchange promoting what it says is a unique approach to governance and voting rights, while reducing short-term pressures on public companies.
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. The stock exchange was proposed to the SEC in November by technology entrepreneur, author and startup adviser Eric Ries, who has been working on the idea for years. He raised $19 million from venture capitalists to get his project off the ground, but approval from U.S. regulators was necessary to launch the exchange. 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.
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. The stock exchange was proposed to the SEC in November by technology entrepreneur, author and startup adviser Eric Ries, who has been working on the idea for years. He raised $19 million from venture capitalists to get his project off the ground, but approval from U.S. regulators was necessary to launch the exchange. 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.
Re: Useful during the next .com crash. (Score:5, Informative)
"Money-losing" phrase worries me a little. Why would a company ever even want to lose money?
Companies lose money by selling below cost, or giving away services, to build market share.
Many tech markets are winner-take-all, so there is pressure to "get big fast". Amazon lost money for many years, but investors were patient, and now most other online retailers have been crushed, and they are harvesting the profits.
Uber is an example of a company today that is losing billions in a struggle to dominate ride-sharing market. Dominance will be harder for Uber than for Amazon because the barriers to entry are lower and customers and drivers have little loyalty to Uber (I switched to Lyft years ago). Investors may lose patience, but there is little sign of that so far.
Other companies that lost money for years before becoming obscenely profitable: Google, Facebook.
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Re: Useful during the next .com crash. (Score:2)
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Something stinks in Denmark (Score:2)
I'm nervous this is going to turn into a way to bypass regulations that are meant to prevent economic crashes. Doesn't help that TFS makes it clear that this is for companies that lake profitability. Also doesn't help that every time the economy collapses the folks who collapsed it hold us hostage until we bail them out because we're too chickenshit to call their bluff and let the fuckers jump.
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Also doesn't help that every time the economy collapses the folks who collapsed it hold us hostage until we bail them out because we're too chickenshit to call their bluff and let the fuckers jump.
Long Term Stock Exchange creepily reminds me of Long Term Capital Management . . . which we also needed to bail out:
https://en.wikipedia.org/wiki/... [wikipedia.org]
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I'm nervous this is going to turn into a way to bypass regulations that are meant to prevent economic crashes. Doesn't help that TFS makes it clear that this is for companies that lake profitability.
If you buy and sell securities, you are under the same regulatory restrictions that any other stock market falls into. There are even rules for high risk securities, that many hedge funds fall into and LTSE may as well, where you aren't allowed to invest in them unless you have a ton of cash and can afford to take the loss.
There are a couple of other stock-exchange startups coming online. This one tries to kill off high-frequency trading, and proports to make costs more transparent:
https://iextrading.com/ [iextrading.com]
New exchange isn't a big deal. (Score:2)
It's really not. People think there are 1 (NYSE) or 3 (NYSE, NASDAW, AMEX) in NYC. There are like 30. Plus, private internal exchanges for trading between the customers of a single firm. The mere existence of another exchange isn't a big deal.
I will say that there being 30+ is a separate issue that seems bad, but the +1 isn't the issue. Among other things, billions in arbitrage is made between the exchanges.
This particular one seems designed t
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Wow, cool that you caught that and I agree with you. The only thing I would like to add is one should catch the name -> LTSE Long Term Stock Exchange. Well in the 90's there was something called LTCM (Long Term Capital Management). Run by really smart guys and blew up in an utterly spectacular fashion. The parallels are truly hilarious.
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Well, the name similarity isn't too damning. Four-letter acronyms are in vogue again, and "Long Term" is a fairly stock phrase. Heck, Warren Buffet is sometimes called a "Long Term Value Investor"
But how they could fail will be spectacularly different. The LTSE will be populated by a lot of cons or highly speculative companies that burn through a lot of cash but may return 100x investments. That is, high-risk/high-reward. LTCM was very low-risk/low-reward. They then used that to take their $5 billion
Long Term Stock Exchange? (Score:4, Interesting)
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
Should be called the Losers, Tricksters, Scoundrels Exchange...
Re:Long Term Stock Exchange? (Score:4, Interesting)
It's begging to have a data center installed with fiber only a few feet long leading directly to the exchange, to host the high-frequency traders, who will suck all potential profit for normal consumers out of the system by committing arbitrage. It's still legal, but I'm afraid it creates an enormous advantage to companies who successfully guess at the next speed increase for their business.
I've been invited to join such companies several times: due to various business interactions I've done with them, I'm afraid that they convinced me that they were simply laundering their insider trading through the bulky high frequency transactions. I declined the offer of employment: It's very difficult to trust a thief, even if it can be profitable to sell them legal goods and services.
Money-losing? (Score:1)
While facing existing brands with billions of their own to spend on the same bids and projects?
US gov? US mil?
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The US government probably isn't. The Saudi government (sovereign wealth fund) seems willing to write billion dollar checks to get in on the current/next round of SV startups.
Amazon vs Walmart, Target; Tesla facing VW, GM? (Score:2)
> While facing existing brands with billions of their own to spend on the same bids and projects?
The same people who backed an online-only bookstore going against Barnes & Noble, then handed them billions to try to become a mass retailer, going head to head with Walmart and Target?
Heck half of Slashdot would put their money into buying 0.00000000000000000001% of Tesla, if they had any money, although the major car companies sell millions of cars every quarter, while Tesla sells thousands. Tesla is a
Comment removed (Score:3)
Send your transaction fees over here (Score:2)
Fine, but...why? (Score:2)
Having another exchange is fine, but - precisely for long-term investors - pretty irrelevant. If I am going to buy and hold, it doesn't matter to me what exchange I go over. Pushing long-term thinking instead of an idiotic focus on next quarter is also desperately needed, but this must be done by the companies in their stock itself. The example mentioned - more voting rights if you hold the stock for longer - could be done by any company that wants to. There are already many companies that have voting and n
Bad choice of name (Score:2)
Apparently nobody told them about LTCM... Thus to put up the facade one must call it LTSE...