On Tuesday, the Texas Stock Exchange (TXSE) took a significant step toward establishing itself as a national competitor to the New York Stock Exchange and Nasdaq, with the U.S. Securities and Exchange Commission granting approval for its operation. The development has been welcomed by Texas lawmakers, including Governor Greg Abbott, who proclaimed Texas as “America’s financial hub.”
Anticipation for TXSE has been mounting since its June 2024 announcement of an ambitious launch backed by $120 million from major investment firms including BlackRock and Citadel Securities. This position makes TXSE one of the most well-capitalized startups endeavoring to create a national stock exchange in several decades.
The TXSE leadership attributes its potential success to Texas’s robust economy and its attractive regulatory and tax environment that has drawn numerous Fortune 500 companies to the state. Currently, Texas holds the second-highest number of Fortune 500 company headquarters in the U.S., trailing only California and ahead of New York.
Nicole Chambers, Global Managing Director of Listings at TXSE, emphasized the favorable conditions for business within Texas at a recent event. With 45 countries smaller than Texas operating their own stock exchanges, she noted, “Texas has really become a leader in where you can do business.”
TXSE’s anticipated launch in fall 2025 will coincide with another notable development; the New York Stock Exchange has announced plans to move part of its operations to Dallas, creating NYSE Texas. Both exchanges are positioned to test Dallas’s emergence as a burgeoning financial services hub, informally dubbed “Y’all Street.”
The success of a new stock exchange often hinges on its ability to attract companies seeking to list. Sriram Villupuram, an associate professor of finance at the University of Texas at Arlington, explained that while trading is now overwhelmingly digital, personal relationships are essential for courting companies. “The supply… that is still very much human to human,” he said.
Historically, efforts to establish a third major national stock exchange have faltered, primarily due to an inability to draw enough companies to list. However, TXSE plans to leverage its digital format and investor backing to differentiate itself, proposing fewer restrictions on company board compositions and aiming to address rising costs and regulatory challenges at existing exchanges.
The successful recruitment of its first 50 to 100 companies will be pivotal for TXSE, potentially creating a momentum effect. As TXSE’s strategy unfolds, its leadership remains optimistic about capitalizing on Texas’s continued economic growth, which could attract various firms.
Dallas has been a financial hub since its central location supported the growth of communication, transportation, and finance industries as Texas modernized. Continued corporate expansion supports this trajectory, with significant investments from major banks and financial services firms. For instance, Goldman Sachs is in the process of constructing a $500 million office tower that will become its largest hub outside New York.
While New York’s investments in the securities sector have grown at a comparatively sluggish rate over two decades, Texas has seen significant growth, with an increase of over 100%. The state’s lower cost of living is one factor drawing talent, enhancing its attractiveness for financial service companies to establish operations in Dallas.
As these changes unfold, the emergence of TXSE alongside the expansion of NYSE and Nasdaq stands to enhance capital access for growing Texas companies, potentially creating a beneficial cycle for both the exchanges and the state economy. Although New York is expected to remain the primary center of equity markets for now, the evolving landscape of financial services indicates a significant shift toward Texas’s burgeoning role.
