Earlier this month, a company called LTSE — Long-Term Stock Exchange — got SEC approval to be the country’s 14th national equity exchange.
But the new exchange, designed to encourage long-term investment and help startups go public, faces an uphill battle against mega-exchanges.
The rise of XL-sized exchanges
In the 1900s, most major US cities had their own stock exchanges. But in the 2nd half of the 20th century, the market consolidated as massive national exchanges swallowed up their regional rivals.
The market that LTSE joins is incestuous. Of the 13 national exchanges, 12 are owned by just 3 companies: The NYSE (owned by the Intercontinental Exchange, or ICE), the Nasdaq, and the Cboe.
The battle against big exchanges
Last year, the 3 mega-exchanges accounted for 61.2% of all stock trading while IEX, the country’s only independent exchange, processed just 2.4%.
Now, the LTSE hopes to attract startups to its exchange by offering tenured share voting (which rewards older shareholders with more voting power) and greater transparency about shareholders.
But the LTSE isn’t the only new exchange on the block: Earlier this year, Morgan Stanley, Charles Schwab, and several other big banks raised $70m for their own Members Exchange, MEMX. Now, they’re just waiting for SEC approval.
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