Texas seeks to launch new stock exchange

Texas Stock Exchange aims to challenge NYSE, Nasdaq while downplaying political aims

What you probably already know: A prominent group of Texas business and political leaders are seeking to launch a competitor to the New York Stock Exchange (NYSE) called the Texas Stock Exchange (TXSE). The group has raised $135 million from backers that include BlackRock and Citadel Securities, and named a veteran leadership team that includes previous executives from Nasdaq and NYSE. The aim is to launch the new exchange in 2025 and has been supported by Texas Gov. Greg Abbott, who says that it will provide businesses more access to capital and more choice when it comes to where they list.

Why? The creation of the TXSE seems to be a response to what some business and political leaders have called “woke capitalism” and the pushback against environmental, social and governance (ESG) models, or triple bottom line frameworks that many large companies have adopted in recent years. Officials with TXSE Group say the group is apolitical and, rather, aims to “revitalize competition for issuers, establish the premier venue for listings, and create a world-class trading platform.” Companies, for years, have complained about the high listing fees the NYSE and Nasdaq charge, which some in the industry refer to as a duopoloy.

What it means: The listing service’s website says that it aims to help high-growth companies access the public markets sooner, while bringing innovation and competition to the U.S.’s equity markets. This week, TXSE announced its board of directors, which includes former Texas Governor and U.S. Energy Secretary Rick Perry, former Securities and Exchange Commissioner Rick Roberts and the global head of strategy for Citadel Securities Alex Bussandri. Texas has the second-most Fortune 500 companies headquartered there, so part of the play will almost certainly be to lure existing public companies to the new exchange.

What happens now? While officials may say this is apolitical, the fact that it’s based in the Republican stronghold of Texas when the other two exchanges are in New York, where Democrat-led state and city officials have imposed taxes and regulation that have irked investors, is not random. The TXSE is being run by industry veterans, including Jeffrey Brown, the previous acting general counsel for Charles Schwab, Nicole Chambers, the former senior managing director for listings at Nasdaq, and Marc Cunningham, the former regional head of capital markets in Houston for the NYSE.