BlackRock Inc., Citadel Securities and other investors are backing an upstart Texas stock market, laying down a challenge to the New York Stock Exchange and Nasdaq Inc. and signaling a potential boost for a state trying to grab more of the financial services industry.
The Texas Stock Exchange has raised $120 million and plans to file registration documents with the U.S. Securities and Exchange Commission, according to a LinkedIn post by James Lee, the exchange's chief executive officer.
The Texas bourse will try to entice companies seeking relief from rising compliance costs at the NYSE and Nasdaq, Lee told the Wall Street Journal, which earlier reported the development. While entirely electronic, Lee said the TXSE will be headquartered in Dallas, bolstering a metro area that has been gaining financial jobs from the likes of Goldman Sachs Group Inc. and Charles Schwab Corp.
"The Texas Stock Exchange 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," the TXSE said in a statement.
The exchange aims to handle its first trades in 2025 and host its first listing in 2026, Lee told the Journal. A spokesperson for Ken Griffin's Citadel confirmed the company is an investor in the project. BlackRock said the project would "increase liquidity and improve market efficiency" for its clients and other investors.
Established Players
The Texas venture is trying to muscle in on a business that consists of about 16 equities exchanges with widely varying trading volumes. NYSE exchanges accounted for more than 20% of the volume in U.S. equities trading in May, with Nasdaq representing over 15%, according to data compiled by Bloomberg.
The listing of companies looking to tap the public market is also highly competitive. To entice corporations to choose their venues for initial public offerings, exchanges typically offer sweeteners like marketing on billboards in Times Square and ringing the opening bell on the floor. Once a company is listed, it generates steady income for the exchange as long as it doesn't leave for a rival venue.
The TXSE is hardly the first initiative in which a group of market participants has backed a new exchange operator in hopes of disrupting the incumbents. Earlier this year, banks and market makers including Citadel Securities got behind Howard Lutnick's new futures exchange, FMX, which is slated to launch in September.
