A new national securities exchange, backed by BlackRock, one of the world’s largest asset management groups, and Citadel Securities, one of the largest electronic trading companies globally, is poised to compete with established players like the New York Stock Exchange and Nasdaq. This Texas Stock Exchange (TXSE) is headquartered in Dallas, Texas, and has successfully raised approximately $120 million in its first financing round, positioning itself to be one of the most well-capitalized exchanges when it submits a registration application to the U.S. Securities and Exchange Commission (SEC).
TXSE’s founder and CEO, James Lee, stated that the evolving landscape of the stock trading market is driving increased trading volumes, providing issuers and sponsors with more options. He emphasized that TXSE aims to create more competition in quoting activities, liquidity, and transparency, ultimately fostering a more stable and reliable market that benefits investors, global issuers, and liquidity providers.
People’s dissatisfaction with the escalating compliance costs and new regulations imposed by Nasdaq and NYSE, such as diversity targets for boards of listed companies by Nasdaq, has opened up opportunities for TXSE. The investors of the new exchange have committed to offering a more favorable choice for corporate chief executives.
TXSE is positioned to become a fully electronic national securities exchange, targeting to commence trading support in 2025 and conduct its first listing in 2026. Its establishment comes against the backdrop of shifting dynamics in the U.S. corporate landscape, with Texas attracting numerous companies’ relocation and expansion due to its favorable regulatory and tax policies.
Texas boasts a prominent presence of Fortune 500 companies, including ExxonMobil, AT&T, American Airlines Group, and ConocoPhillips. The state is home to over 5,200 private equity-backed companies, many of which are gearing up for public listing. Additionally, the region houses more than 1,500 publicly traded companies.
James Lee highlighted, “Texas and other states in the Southeast have become economic powerhouses. The demand from investors and businesses to expand stock trading and listing options is increasing, making it an opportune time for us to establish a national securities exchange in Texas.”
The new securities exchange plans to establish a physical location in downtown Dallas. However, carving out a space in the lucrative U.S. listing market may not be an easy feat for a new exchange, as the NYSE and Nasdaq have almost monopolized the U.S. listing market since the early 2000s.
The U.S. Securities and Exchange Commission prioritizes automated trading platforms, posing a challenge for smaller exchanges to attract significant orders from traders. Key indicators of an exchange’s strength, like trading volume, have been concentrated between the two industry giants, making it challenging for smaller exchanges to attract large orders from traders. Since obtaining SEC approval in 2019, the Long-Term Stock Exchange has experienced only two listings to date.
Castle Securities, one of the world’s largest electronic trading companies, had previously supported exchanges specializing in various assets, such as the Members Exchange (MEMX) in stocks and options and the FMX Futures Exchange and EDX Markets in the cryptocurrency sector, before backing the Texas Stock Exchange.
BlackRock, the world’s largest asset management company, expressed its pride in being a founding investor in the Texas Stock Exchange. A company spokesperson cited by Reuters stated, “BlackRock is honored to be a founding investor in the Texas Stock Exchange, enhancing liquidity for clients in the U.S. capital markets and improving market efficiency for all investors.”