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> Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? The fact that a company is listed on multiple exchanges does

> Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? The fact that a company is listed on multiple exchanges doesn't mean it has different sorts of stock for each exchange. This real subject of this article is tenure voting, which is an aspect of the stock (not the exchange). The reason exchanges are mentioned is that exchanges have rules about the sorts of stock they will list. But to have tenure voting, you only need one exchange to allow out (like the proposed long-term exchange). And most stocks aren't cross-listed to multiple exchanges anyways. > How long until there is a secondary market for buying and selling voting rights? Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. This problem is so obvious that it must have been addressed by the people proposing this.

conistonwater 9y ago
> This problem is so obvious that it must have been addressed by the people proposing this. I think this is just optimism, it would be nice to have an actual reason to think this is the case.
- hkmurakami 9y ago
  I looked at the people backing the exchange and as far as I can tell, no one actually has a proper finance background, let alone a background in exchanges (which is, from what I've read, a pretty esoteric and specialized area within finance). The idea of Eric Reis running a stock exchange is... strange to me.
  - eries 9y ago
    Me too! Luckily the rest of the team is way more qualified
    - hkmurakami 9y ago
      Hi Eric. I recall the times when making long term equity holdings tax advantaged (ex: 0% cap gains after holding for 10 years) as a path to achieve similar goals to what LTSE is trying to achieve. Details (and general HN cynicism) aside, we hope your venture is a success. As a greater man than I once said, your success is our success. We'll be rooting for you.
Fomite 9y ago
> This problem is so obvious that it must have been addressed by the people proposing this. I feel like this sentence could be found on the graves of many a failed startup.
- eries 9y ago
  And also on many IPO tombstones :)
hobbyjogger 9y ago
>Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Depository Trust Company via its nominee, Cede & Co. [1]. Through a complicated set of regulatory and contractual arrangements, public companies, the beneficial owners of their stock (i.e. the investor at the end of the chain) and each intermediary (banks and brokers, etc.) all maintain a sort of legal fiction that the shares are "owned" by Joe Schmoe, even though all he really has is an attenuated set of contractual rights that flow through the various intermediaries between him and "his" shares held by Cede. Joe Schmoe does not technically or legally own those shares. Cede does. Believe it or not, you were spot on in predicting that the third party would allow "voting by proxy." That's exactly how Joe Schmoe (i.e. all of us) must vote our shares if we want to participate in a stockholder vote. We can't just show up at the meeting (or fill out the company's proxy card). You send a "voting instruction form" telling your broker how you'd like to vote, and your broker then tells Cede & Co. how to vote your shares at the stockholder meeting.[2] To address your specific point, tenure voting would surely be based on the tenure of the beneficial owner (i.e. the person at the end of the chain who gets to vote) not the nominee holding the shares in "street name" on the beneficial owner's behalf. This might take some reworking of the arrangements between the brokers, DTC, clearinghouses, etc. (likely needing to be be built into the financial systems that log transfers and ownership, if not already provided for) but would not really pose a significant barrier. [1] https://www.bloomberg.com/view/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares https://www.bloomberg.com/view/articles/2015-07-14/banks-for... [2] https://www.sec.gov/spotlight/proxymatters/proxy_materials.shtml#what_is_registered_owner https://www.sec.gov/spotlight/proxymatters/proxy_materials.s...
- jessriedel 9y ago
  > tenure voting would surely be based on the tenure of the beneficial owner This only works if the intermediate holder of the stocks is coordinating with the exchange and/or company. The problem is that there is a financial incentive for someone else who is not working with them to buy up the stock, immediately resell it with the normal guarantees (that they will pass on dividends, allow voting by proxy etc.), but not pass on such re-sell information to the exchange/company. Does the exchange/company have some sort of a right to prevent resale unless tenure information is tracked? Naively Id guess that they can't, or otherwise they's try to prevent stuff like short-selling too.

conistonwater 9y ago

> This problem is so obvious that it must have been addressed by the people proposing this. I think this is just optimism, it would be nice to have an actual reason to think this is the case.

hkmurakami 9y ago
I looked at the people backing the exchange and as far as I can tell, no one actually has a proper finance background, let alone a background in exchanges (which is, from what I've read, a pretty esoteric and specialized area within finance). The idea of Eric Reis running a stock exchange is... strange to me.
- eries 9y ago
  Me too! Luckily the rest of the team is way more qualified
  - hkmurakami 9y ago
    Hi Eric. I recall the times when making long term equity holdings tax advantaged (ex: 0% cap gains after holding for 10 years) as a path to achieve similar goals to what LTSE is trying to achieve. Details (and general HN cynicism) aside, we hope your venture is a success. As a greater man than I once said, your success is our success. We'll be rooting for you.

Fomite 9y ago

> This problem is so obvious that it must have been addressed by the people proposing this. I feel like this sentence could be found on the graves of many a failed startup.

eries 9y ago
And also on many IPO tombstones :)

hobbyjogger 9y ago

>Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Depository Trust Company via its nominee, Cede & Co. [1]. Through a complicated set of regulatory and contractual arrangements, public companies, the beneficial owners of their stock (i.e. the investor at the end of the chain) and each intermediary (banks and brokers, etc.) all maintain a sort of legal fiction that the shares are "owned" by Joe Schmoe, even though all he really has is an attenuated set of contractual rights that flow through the various intermediaries between him and "his" shares held by Cede. Joe Schmoe does not technically or legally own those shares. Cede does. Believe it or not, you were spot on in predicting that the third party would allow "voting by proxy." That's exactly how Joe Schmoe (i.e. all of us) must vote our shares if we want to participate in a stockholder vote. We can't just show up at the meeting (or fill out the company's proxy card). You send a "voting instruction form" telling your broker how you'd like to vote, and your broker then tells Cede & Co. how to vote your shares at the stockholder meeting.[2] To address your specific point, tenure voting would surely be based on the tenure of the beneficial owner (i.e. the person at the end of the chain who gets to vote) not the nominee holding the shares in "street name" on the beneficial owner's behalf. This might take some reworking of the arrangements between the brokers, DTC, clearinghouses, etc. (likely needing to be be built into the financial systems that log transfers and ownership, if not already provided for) but would not really pose a significant barrier. [1] https://www.bloomberg.com/view/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares https://www.bloomberg.com/view/articles/2015-07-14/banks-for... [2] https://www.sec.gov/spotlight/proxymatters/proxy_materials.shtml#what_is_registered_owner https://www.sec.gov/spotlight/proxymatters/proxy_materials.s...

jessriedel 9y ago
> tenure voting would surely be based on the tenure of the beneficial owner This only works if the intermediate holder of the stocks is coordinating with the exchange and/or company. The problem is that there is a financial incentive for someone else who is not working with them to buy up the stock, immediately resell it with the normal guarantees (that they will pass on dividends, allow voting by proxy etc.), but not pass on such re-sell information to the exchange/company. Does the exchange/company have some sort of a right to prevent resale unless tenure information is tracked? Naively Id guess that they can't, or otherwise they's try to prevent stuff like short-selling too.