This week a plan was revealed to install a new stock exchange that could possibly compete with the iconic New York Stock Exchange (NYSE) in the United States: a stock market in the south, specifically in Dallas, Texas.
It would be called the Texas Stock Exchange and behind the plan is TXSE Group, supported for the moment by a $120 million pot raised by BlackRock and Citadel Securities.
What phase are TXSE Group’s plans in? And, if it does come into operation, would it really represent competition for a market as established as New York? This is what is known so far.
When would a future Texas Stock Exchange be possible?
TXSE Group said on June 5 in a statement that it “will seek to register” with the United States Securities Commission (SEC), although it did not give a date or schedule for its possible launch, if it is approved by the regulator of the US market.
He did specify that he completed an initial capital raising phase with the participation of “more than a dozen investors, including some of the largest financial institutions in the world,” such as BlackRock and Cidatel Securities. It already has, according to what he said, $120 million that would position it as the best-capitalized new exchange to register with the SEC.
Will it be like the New York Stock Exchange?
In practice yes. Shares and financial products such as those traded on the New York Stock Exchange will be traded there.
The Reuters agency gives as context that, amid the good performance that the New York market has had recently, there are many companies inside and outside the United States that want to trade their shares there, but have not been able to do so easily. Let us remember that the New York Stock Exchange houses the country’s main stock indices, such as the Nasdaq technology company index.
The newspaper The Wall Street Journal He also cited the rising costs and stricter rules facing companies that want to trade on the New York Stock Exchange and Nasdaq. The Texas Stock Exchange hopes to attract those companies.
“Changes in the equity markets are creating more (trading) volumes and more options for (companies) listing their shares,” James Lee, CEO of TXSE Group, said in the statement. “TXSE will create more competition in terms of liquidity, activity and transparency,” he considered.
Will a new stock exchange in Texas be welcomed?
This remains to be seen. Specialized media reported that Texas, for example, has restricted its public pension funds from investing in some firms such as BlackRock that have initiatives underway with environmental, social and governance angles.
It is what is known in English by the acronym ESG and includes a range of ethically responsible practices, from reducing carbon emissions to tackling discrimination in the workplace. Texas, as a state, has taken a political stance toward those initiatives.
Last February, BlackRock CEO Larry Fink attempted to ease tensions with Republican officials in Texas after the state criticized the asset manager for making efforts to move away from fossil fuel-related assets.
And why in Texas?
TXSE said it is the states in the “southeast quadrant” of the United States that are leading economic and population growth. That “makes Texas the clear choice to establish a new stock exchange.”
“Texas has been a leader in attracting business relocation and expansion. It is home to more Fortune 500 companies than any other state and more than 5,200 private equity-backed companies, many of which are preparing to access public markets,” he added. .
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