Is the Long-Term Stock Exchange going to be the game changer in the world of finance?
The new stock exchange looks like a promising disruptor
The Long-Term Stock Exchange (LTSE), created by the ‘Lean Start-up’ author, Eric Riles, launched in early September this year. The LTSE has all the right attributes to be a catalyst for change. On its website, it defines itself as a public market option for companies and investors who share a long-term vision.
This definitely brings a breath of fresh air in a financial world founded on capitalism and geared towards short-term profit at the expense of the stakeholders and the larger world. The founding principle of finance is to maximise shareholder’s wealth, which indirectly creates a tunnel vision to maximise profits and focus on short term gains without much thought to the impact on environment and social factors.
The newest addition to the list of stock exchanges is principled based and hinged on five premises: Stakeholders, strategy, compensation, board, investors. It is backed by Silicon Valley major league VCs including Andreessen Horowitz.
The pressure on CEOs in companies that are in the public eye forces management to forsake long term measures and concentrate on churning positive numbers quickly, particularly before quarterly earnings reporting season.
While there is no pre-requisite for the company to be impact-based, most companies that will fluctuate towards such principles, by their very nature, will harbour a long-term vision or some sort of societal impact agenda. At the very least, to prove engagement and commitment.
While there are no companies listed yet (as of date), this new entry bodes new signs of life for companies based on core principles and looking for funding that could be resolved by an IPO. Employees want to feel engaged and fulfilled. ESG and impact investing are becoming mainstream, especially in a new world where the public demand more accountability and transparency from businesses. Will it enlarge the pool of high calibre CEOs and management with skin in the game and deter the ones only interested in three-year contracts with big bonuses and inflating short term earnings? Only time will tell, but it is a positive sign…that change is coming.