The Long-Term Stock Exchange (LTSE) announced its launch last week for trading stocks on its platform and listing companies on the exchange. As the name suggests, the exchange aims to list companies that desire to create value over time.
The LTSE’s listing requirements take a “principles-based approach” to long-termism (in contrast to a one-size-fits-all approach) requiring listed companies to pledge to operate consistently with five principles:
- Stakeholders. Long-term focused companies should consider a broader group of stakeholders and the critical role they play in one another’s success.
- Strategy. Long-term focused companies should measure success in years and decades and prioritize long-term decision-making.
- Compensation. Long-term focused companies should align executive compensation and board compensation with long-term performance.
- Board. Boards of directors of long-term focused companies should be engaged in and have explicit oversight of long-term strategy.
- Investors. Long-term focused companies should engage with their long-term shareholders.
Guided by these principles, listed companies are required to adopt and maintain policies that reflect the companies’ long-term strategies and practices. The LTSE hopes that requiring listed companies to make the policies public will facilitate investors and other stakeholders’ understanding of these businesses. Moreover, taking a principles-based approach allows for the exchange to list a wider range of companies, including companies with dual-class structures.
To date, no companies are yet listed on the LTSE. However, the LTSE allows shares of companies, regardless of whether they are listed on the LTSE or another exchange, to trade simultaneously and in real time across all U.S. exchanges, alternative trading systems and platforms operated by securities dealers.
The LTSE’s launch comes at a time where market participants and some issuers are grappling with questions relating to stakeholder versus shareholder primacy, stakeholder capitalism concerns and the rise of interest in ESG matters across all asset classes.