Start-up exchange IEX has announced an agreement with fellow newcomer Long-Term Stock Exchange (LTSE) to create a new listings environment for companies focused on providing long-term value.
The LTSE, which is awaiting regulatory approval to offer its own listings, plans to drive long-termism through elevated listing standards that will be reinforced through additional disclosure and governance standards. The listing standards will focus on four pillars: improved shareholder voting rights for investors who have held a stock more than a set time period, board engagement guidelines, long-term objectives and executive compensation.
Under the agreement, IEX, which was recently approved by the SEC as a listings venue, will create a new listings category called ‘LTSE listings on IEX’ – in which companies will be subject to a specialized set of standards. The LTSE and IEX are working together to submit this proposal to the SEC for approval, at which point the details of the listings standards will be made public.
The LTSE is also pursuing its own path to regulatory approval to operate as an exchange. If approval is granted, qualified companies on ‘LTSE listings on IEX’ will be able to transfer to LTSE.
The number of US public companies has halved since its peak in 1996, something the SEC and the major US exchanges are keen to change.
Eric Ries, founder and CEO of the LTSE, got the idea to launch a listings venue that preserved the long-term focus of companies and investors while he was writing The Lean Startup, a New York Times best-seller. ‘As I talked to more and more CEOs and executives at public and private companies, I kept hearing the same sentiment over and over again: short-term pressures were driving their decision-making, often at the sacrifice of the long-term potential of the business,’ Ries writes on the LTSE company blog.
The LTSE had been exploring a partnership with other stock exchanges before deciding to partner with IEX, according to a company spokesperson.
‘We are thrilled LTSE has selected IEX as the exchange to offer their long-term focused listing standards to companies looking to go public,’ IEX co-founder and CEO Brad Katsuyama says in a statement. ‘We think LTSE offers a differentiated choice for companies, and will add to much needed competition in the listing market.’
