U.S. regulators approve the Long-Term Stock Exchange • Hacker News Board

Re: U.S. regulators approve the Long-Term Stock Exchange

#161

Post by dang » Sat, May 11, 2019, 2:13 PM UTC

segmondy wrote: post #35

jstanley wrote: post #25

Earlier quoted context omitted.

How exactly do you believe high-frequency traders "eat up" pension funds? The only time any limit order gets executed is when it is the best price available. From the other perspective, the price a market order is matched at is the price of the best limit order available. In the absence of high-frequency traders, the best price available will be worse , not better.

Sure, keep drinking that koolaid.

Please do not post in the flamewar style to HN. It's against the rules here.

https://news.ycombinator.com/newsguidelines.html

Re: U.S. regulators approve the Long-Term Stock Exchange

#162

Post by xiphias2 » Sat, May 11, 2019, 2:14 PM UTC

eries wrote: post #144

rcMgD2BwE72F wrote: post #142

Earlier quoted context omitted.

Will it be possible for listed companies to prohibit short-selling of their stocks? Edit: If so, I'm pretty sure Tesla Inc. would be happy to participate in your beta program.

No Some of the standards we hope to file in the future could affect the volume of shares available for short activity, but that would be an indirect consequence of encouraging longer holding periods. Edit: indeed. But we don’t do anything to help with CEO tweeting :)

Does the volume limitation mean that there would be an option for an investor to buy without allowing the brokerages to borrow the stock out to short sellers?

Re: U.S. regulators approve the Long-Term Stock Exchange

#163

Post by eries » Sat, May 11, 2019, 2:17 PM UTC

xiphias2 wrote: post #162

eries wrote: post #144

Earlier quoted context omitted.

No Some of the standards we hope to file in the future could affect the volume of shares available for short activity, but that would be an indirect consequence of encouraging longer holding periods. Edit: indeed. But we don’t do anything to help with CEO tweeting :)

Does the volume limitation mean that there would be an option for an investor to buy without allowing the brokerages to borrow the stock out to short sellers?

There’s no volume limitation and the specific implementation you mention is not correct. But you’re on the right track, something like this is indeed possible.

Re: U.S. regulators approve the Long-Term Stock Exchange

#164

Post by eries » Sat, May 11, 2019, 2:19 PM UTC

vasilipupkin wrote: post #157

eries wrote: post #128

Hey everyone, Eric Ries here, founder and CEO of LTSE (and also you may remember me from such roles as the Lean Startup guy). Day one of approval has been kind of exhausting with all the attention but I wanted to stop by this thread and say hello. Have questions? Happy to answer as best I can. Keep in mind that this is a highly-regulated startup so we are sometimes limited in what we can say publicly. I’ll do my best…

Can you explain why another exchange is needed for this? A company is free to issue a special share class and list it on one of existing exchanges, no problem. There is nothing stopping companies from doing this long term incentive thing now. If they aren't doing it on existing exchanges, why would they do it on your exchange?

An analogy: any software company is free to build their own custom protocol, no problem. Nothing stops them from doing their own hyperlinking thing now. If they aren’t building it on existing applications, why do we need the WWW?

Re: U.S. regulators approve the Long-Term Stock Exchange

#165

Post by eries » Sat, May 11, 2019, 2:41 PM UTC

bk8335 wrote: post #159

I couldn't see it in the reuters article so apologies if this is no longer relevant. Is the plan still to give different number of votes depending on how long the shares have been held? If so, wouldn't selling your shares you've held for a long time destroy value i.e. by resetting the votes to zero? Also, if different shares have different values, would they each have different prices, or would the listed price be so…

I can’t share our future plans until we file with the regulators. It won’t be exactly the same as what we filed and won staff approval for last year, but that filing can give you some sense of how possible rules could work: https://www.sec.gov/rules/sro/iex/2018/34-82948.pdf

Note that this particular system does not have either of the problems you raise as questions

Re: U.S. regulators approve the Long-Term Stock Exchange

#166

Post by DevX101 » Sat, May 11, 2019, 2:42 PM UTC

eries wrote: post #128

Hey everyone, Eric Ries here, founder and CEO of LTSE (and also you may remember me from such roles as the Lean Startup guy). Day one of approval has been kind of exhausting with all the attention but I wanted to stop by this thread and say hello. Have questions? Happy to answer as best I can. Keep in mind that this is a highly-regulated startup so we are sometimes limited in what we can say publicly. I’ll do my best…

Does this exchange have any plans in place to avoid front-running high frequency trading? Similar to IEX.

It seems the focus of this initiative is aimed at aligning long term voter control, but these front-running techniques don't really care about control.

Re: U.S. regulators approve the Long-Term Stock Exchange

#167

Post by conanbatt » Sat, May 11, 2019, 2:46 PM UTC

riffraff wrote: post #121

icelancer wrote: post #114

Earlier quoted context omitted.

Most mutual funds available at retail are borderline scams as-is. It is highly unlikely you will find one that has a true ROI / Sharpe Ratio above investing in basic Vanguard Index Fund ETFs, yet the public is still allowed to throw away 2% per year in management funds + loads + fees for buying garbage mutual funds and ETFs from enormous companies that sell at retail.

There is still a significant difference between earning less than you could in your retirement savings and wiping half of them because you put them in a bad investment though.

Not if you aggregate the amounts stolen. Im sure that 2% is a staggering amount of money, maybe more than all the cash robberies that are reported to the police yearly.

Re: U.S. regulators approve the Long-Term Stock Exchange

#168

Post by EnderViaAnsible » Sat, May 11, 2019, 2:52 PM UTC

EnderViaAnsible wrote: post #146

ianai wrote: post #70

Earlier quoted context omitted.

Fta:”The new exchange would have extra rules designed to encourage companies to focus on long-term innovation rather than the grind of quarterly earnings reports by asking companies to limit executive bonuses that award short-term accomplishments. It would also require more disclosure to investors about meeting key milestones and plans, and reward long-term shareholders by giving them more voting power the longer the…

I don't blame our OP for wanting more information. Certainly anything trumpeting the zeitgeist or offering a suspiciously tuned Worry De Jour should be evaluated carefully. (That is, it's obvious that "we want to fix short term ism in the stock market" will be a popular and marketable idea, whether that is the intention/actual end result or not.) Even in the parts you've quoted, the language seems very careful. They'…

I think I'd add that my concerns aren't just, or even primarily, that they are trying to do something nefarious.

Rather, I tend to view issues as having a certain amount of public mindshare, and the success or failure of initial attempts at a solution tend to have an outsized influence on public willingness to assign resources to a problem.

So I think that if this is a poorly implemented solution, and fails, we may not try again for some time, even if the actual idea is perfectly workable. Since I also agree that this short term...uh...ism...is a genuine problem, I would very much like to see a successful solution to the trouble.

And I do mean the traditional public: this problem of poor implementation scuttling perfectly good ideas also afflicts the efforts of for profit corporations as much as it does democratically controlled public servants or charitably beholden non-profits.

Re: U.S. regulators approve the Long-Term Stock Exchange

#169

Post by hellllllllooo » Sat, May 11, 2019, 3:11 PM UTC

MandieD wrote: post #127

hellllllllooo wrote: post #24

I don't really see how the rules mentioned will change things that much. > asking companies to limit executive bonuses that award short-term accomplishments. Why would I care as an investor? I still want the stock to go up quickly. Executives own stock and without a cash bonus wouldn't this incentive trying to get quick increases in stock value. > more disclosure to investors about meeting key milestones and plans, a…

“Why would I care as an investor? I still want the stock to go up quickly.” That is not what investors want; that’s what speculators want. I am saving for retirement in about 15-20 years; I want my investments to appreciate a reasonable amount over that period and show a stable pattern of generating good returns - I don’t really care what their prices are like in the next few months, except for that if they’re down i…

Sure. But how do these rules prevent speculation?

Re: U.S. regulators approve the Long-Term Stock Exchange

#170

Post by vasilipupkin » Sat, May 11, 2019, 3:24 PM UTC

eries wrote: post #164

vasilipupkin wrote: post #157

Earlier quoted context omitted.

Can you explain why another exchange is needed for this? A company is free to issue a special share class and list it on one of existing exchanges, no problem. There is nothing stopping companies from doing this long term incentive thing now. If they aren't doing it on existing exchanges, why would they do it on your exchange?

An analogy: any software company is free to build their own custom protocol, no problem. Nothing stops them from doing their own hyperlinking thing now. If they aren’t building it on existing applications, why do we need the WWW?

not a great analogy. There is no new protocol required to trade stocks, right? Companies already issue different classes of stocks with different rights. GOOG vs GOOGL or Viacom VIA vs VIAB. It's not a technology issue, it's a legal / regulatory issue. Because of Reg NMS, your exchange will get some volume but I don't see what value it creates beyond playing regulatory arbitrage.