Texas Stock Exchange Disrupts Wall Street

A group supported by BlackRock and Citadel Securities is spearheading the creation of a new national stock exchange in Texas in a move to challenge the dominance of the New York Stock Exchange (NYSE) and Nasdaq.

As reported by the Wall Street Journal, the initiative of the Texas Stock Exchange (TXSE) has garnered approximately $120 million in funding from individual investors and major financial institutions. CEO James Lee revealed plans to file registration documents with the Securities and Exchange Commission later this year, with the goal of commencing trades in 2025 and hosting its first listing by 2026.

The TXSE aims to capitalize on growing dissatisfaction with escalating compliance costs and regulatory burdens at established exchanges like Nasdaq and NYSE. Promising a more CEO-friendly environment, backers pledge to provide an alternative trading platform that addresses the evolving needs of corporations.

In his LinkedIn profile, Lee states that the TXSE will be fully electronic and that it “will focus on enabling U.S. and global companies to access U.S. equity capital markets and will provide a venue to trade and list public companies and the growing universe of exchange-traded products.”

However, the TXSE plans to establish a physical presence in downtown Dallas.

“Dallas has become one of, if not the most, dominant financial centers in the country, if not the world,” Lee said.

Despite speculation about the exchange’s political leanings, Lee stressed its apolitical stance, focusing solely on financial operations.

Breaking into the stock-listings business poses significant challenges, given the duopoly enjoyed by NYSE and Nasdaq. Previous attempts by other exchanges to disrupt the market have seen limited success, with few gaining traction beyond a handful of listings.

The move comes as dozens of companies are moving to states with more friendly regulations and taxation policies. Texas is only second to California in terms of the number of Fortune 500 companies, while it’s also tied with New York.
Companies such as Exxon Mobil, AT&T and American Airlines are based in Texas. Tesla is looking to incorporate in Texas from Delaware after the Delaware Court of Chancery denied his $46 billion pay package.