SAN FRANCISCO (Reuters) - U.S. regulators on Friday approved a new stock exchange that is the brainchild of a Silicon Valley entrepreneur, a move that will give high-growth technology companies more options to list their shares outside of the traditional New York exchanges.

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst/File Photo

The U.S. Securities and Exchange Commission approved the creation of the Long-Term Stock Exchange, or LTSE, a Silicon Valley-based national securities exchange promoting what it says is a unique approach to governance and voting rights, while reducing short-term pressures on public companies.

The LTSE is a bid to build a stock exchange in the country’s tech capital that appeals to hot startups, particularly those that are money-losing and want the luxury of focusing on long-term innovation even while trading in the glare of the public markets.

The stock exchange was proposed to the SEC in November by technology entrepreneur, author and startup adviser Eric Ries, who has been working on the idea for years. He raised $19 million from venture capitalists to get his project off the ground, but approval from U.S. regulators was necessary to launch the exchange.

Friday’s decision followed an uncertain fate for LTSE, which had faced SEC opposition before revising parts of its proposal.

Ries says the public market’s focus on short-term results leads to a decline in innovation, something LTSE wants to reverse. A 2017 study by public policy think tank Third Way showed that going public was accompanied by a 40 percent decline in patents within five years after listing, the result of pressure to satisfy analysts’ short-term expectations.

“Everyone is incentivized to make the numbers quarter to quarter,” Ries said in a recent interview with Reuters.

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 they hold the stock.

LTSE would be the only stock exchange in California and the first in Silicon Valley since the shuttering of the Pacific Exchange in San Francisco at the end of the dot-com boom. It remains to be seen how well it would compete with the larger and better-resourced New York Stock Exchange and Nasdaq, which often court tech companies with fanfare to persuade them to list.

Ries wants companies to go public sooner and have the ability to continue experimenting. This way, he said, more value can be created in the public markets, giving retail investors a chance to cash in on high-growth startups.

The median age of tech startups going public has stretched to 12 years, and by the time they list have achieved most of their growth, enriching only an elite group of investors.

Ries said LTSE would allow companies to dual-list their stock on other exchanges. He added that a number of technology companies and a mix of foreign and U.S. investors and asset managers had signed letters of intent to participate in the exchange, but declined to provide further details.