Texas Stock Exchange Challenges New York’s Market Dominance with Big Backers

Key Points:

1. New Stock Exchange Initiative:
   • A new Texas-based stock exchange, TXSE, aims to challenge the dominance of New York’s stock exchanges.
2. Support from Major Investors:
   • TXSE has backing from prominent investors like BlackRock and Citadel Securities, having raised $120 million.
3. Regulatory Approval:
   • TXSE will seek approval from the US Securities and Exchange Commission to operate as a new hub for listed companies and exchange-traded funds.
4. Stability and Predictability:
   • The goal is to offer more stability and predictability in listing standards and costs for companies.
5. Attractions of Texas:
   • Texas boasts the highest number of Fortune 500 companies in the US, making it an attractive location for the exchange.
6. Skepticism and Challenges:
   • Despite the support, there is skepticism about TXSE’s ability to succeed due to the crowded market and the stronghold of NYSE and Nasdaq.
   • Previous attempts by other exchanges to compete with NYSE and Nasdaq have largely been unsuccessful.
7. Expert Opinions:
   • Fred Tomczyk of Cboe Global Markets highlighted the difficulties in breaking into the corporate listing market.
   • Doug Cifu of Virtu, who declined to invest in TXSE, questioned the need for another listings venue and praised the existing exchanges’ competitiveness.
8. Regulatory Concerns:
   • Some market participants noted that regulatory requirements pose significant challenges, not the exchanges themselves.
9. Examples of Other Exchanges:
   • The Long Term Stock Exchange, launched in 2020, has listed only two companies.
   • IEX, which started trading in 2013, attracted only one listing before closing its listings unit in 2019.
10. Criticism of Existing Exchanges:
    • Some believe that NYSE and Nasdaq have overly demanding listing standards, though their intentions are to maintain high market standards.
11. Investor Advocate Concerns:
    • Investor advocates worry that easier listing standards might not benefit investors and could weaken market integrity.
    • High standards are seen as crucial for maintaining investor confidence and market strength.
12. TXSE and Investor Responses:
    • TXSE declined to comment beyond its press release.
    • BlackRock expressed pride in supporting TXSE to improve market liquidity and efficiency.
    • Both Citadel and BlackRock have histories of investing in new trading platforms, such as the Members Exchange launched in 2020.
      
      Source https://on.ft.com/4bOKZtG