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https://www.wsj.com/articles/silicon-valley-vs-wall-street-can-the-new-long-term-stock-exchange-disrupt-capitalism-1508151600 https://www.wsj.com/articles/silic

https://www.wsj.com/articles/silicon-valley-vs-wall-street-can-the-new-long-term-stock-exchange-disrupt-capitalism-1508151600 https://www.wsj.com/articles/silicon-valley-vs-wall-street-c... In the linked WSJ article, that explains this quite a bit better than the medium blogpost. Basically, it appears that the main thing is that the voting power of shares win increase with the time the shares are owen. (Though there's talk of opting in to this process.) There's also going to be a prohibition on companies giving quarterly earnings guidance. It seems like it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor, and people with short-term goals, like activist investors. (But this is a mixed thing - it's more accountable than a setup with multiple stock classes where the founders retain all control.) EDIT: Random thought: I wonder how this exchange would handle shorting stock, when it comes to the tenure requirement.

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qubex 9y ago
Naked shorters by definition own no stock currently so have no right to vote, but it may or may not affect calculations regarding the average seniority of stock against which rights are measured (it cannot be absolute, since you could conceivably have a situation where everybody shuts purchased the stock, and thus ownership of all would be zero, and thus nobody would have a right to vote). And what of options and other derivatives? What of trust funds and other intermediate vehicles of ownership that might themselves have (perhaps partially) changed hands?
- hendzen 9y ago
  Yeah I expect these rules will be rendered effectively moot by equity swap trading.
  - eries 9y ago
    Our rules handle derivatives correctly, including swaps. Otherwise it would be trivial to avoid the long-term vote weighting
    - qubex 9y ago
      What happens when stock is held by a shell company (or trust fund) and its property partially changes? What happens when one LTSE form buys up part of another LTSE firm that partially owned the first one to begin with? (I assume that rules are built with ADG in mind, general constructs are far more involved.)
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DennisP 9y ago
Seems like it might do a better job of incentivizing long-term thinking if you had to lock your shares, and your vote were multiplied by how long you have to wait before selling them.
- eries 9y ago
  I like this idea a lot, and hope to have more to say about it next year sometime :)
JumpCrisscross 9y ago
> it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor It will just prioritize investors with the sense to stick their shares in an SPV (e.g. an LLC or trust) and then sell the SPV with the premium voting rights attached. (Also amplify the benefits of intergenerational wealth transfer.)
- TheRealPomax 9y ago
  There is no "just". If someone can come up with that exploit in an HN comment, it would be incredible if there were no provisions to explicitly forbid this kind of share from being used in this fashion.
  - JumpCrisscross 9y ago
    It’s an NP hard problem. Tracing beneficial ownership is tough to scale. That’s why our system does it sparingly, e.g. when investigating malfeasance. Every past attempt at systematising this trace function has run into hurdles which are now predictable. They aren’t easy to solve without creating unacceptable side effects, and it’s easier for the beneficial owner to adapt than for an exchange to re-write its rules.
walshemj 9y ago
Ah so this is yet more locking out the ordinary Joe from this sort of investment and another way to screw over employee share holders.
- eries 9y ago
  On the contrary, unlike most systems today, our rules are very favorable to both retail investors and employees. Anyone can register their shares for Long-Term voting, not just founders or big institutions.
eries 9y ago
I liked your summary. We definitely think our setup is a more defensible governance solution than the typical founder/monarch for life. Our rules also are carefully tailored to Do The Right Thing with shorts and other derivatives, but I can’t say much yet about how it works in detail

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qubex 9y ago

Naked shorters by definition own no stock currently so have no right to vote, but it may or may not affect calculations regarding the average seniority of stock against which rights are measured (it cannot be absolute, since you could conceivably have a situation where everybody shuts purchased the stock, and thus ownership of all would be zero, and thus nobody would have a right to vote). And what of options and other derivatives? What of trust funds and other intermediate vehicles of ownership that might themselves have (perhaps partially) changed hands?

hendzen 9y ago
Yeah I expect these rules will be rendered effectively moot by equity swap trading.
- eries 9y ago
  Our rules handle derivatives correctly, including swaps. Otherwise it would be trivial to avoid the long-term vote weighting
  - qubex 9y ago
    What happens when stock is held by a shell company (or trust fund) and its property partially changes? What happens when one LTSE form buys up part of another LTSE firm that partially owned the first one to begin with? (I assume that rules are built with ADG in mind, general constructs are far more involved.)
  - deleted 9y ago
    [deleted]

DennisP 9y ago

Seems like it might do a better job of incentivizing long-term thinking if you had to lock your shares, and your vote were multiplied by how long you have to wait before selling them.

eries 9y ago
I like this idea a lot, and hope to have more to say about it next year sometime :)

JumpCrisscross 9y ago

> it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor It will just prioritize investors with the sense to stick their shares in an SPV (e.g. an LLC or trust) and then sell the SPV with the premium voting rights attached. (Also amplify the benefits of intergenerational wealth transfer.)

TheRealPomax 9y ago
There is no "just". If someone can come up with that exploit in an HN comment, it would be incredible if there were no provisions to explicitly forbid this kind of share from being used in this fashion.
- JumpCrisscross 9y ago
  It’s an NP hard problem. Tracing beneficial ownership is tough to scale. That’s why our system does it sparingly, e.g. when investigating malfeasance. Every past attempt at systematising this trace function has run into hurdles which are now predictable. They aren’t easy to solve without creating unacceptable side effects, and it’s easier for the beneficial owner to adapt than for an exchange to re-write its rules.

walshemj 9y ago

Ah so this is yet more locking out the ordinary Joe from this sort of investment and another way to screw over employee share holders.

eries 9y ago
On the contrary, unlike most systems today, our rules are very favorable to both retail investors and employees. Anyone can register their shares for Long-Term voting, not just founders or big institutions.

eries 9y ago

I liked your summary. We definitely think our setup is a more defensible governance solution than the typical founder/monarch for life. Our rules also are carefully tailored to Do The Right Thing with shorts and other derivatives, but I can’t say much yet about how it works in detail