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5 Things You Should Know About the Texas Stock Exchange (TXSE)

10 Jun 2024

5 Things You Should Know About the Texas Stock Exchange (TXSE)

The financial world is buzzing with the news of the upcoming Texas Stock Exchange (TXSE). This new player in the market, backed by industry heavyweights, promises to bring a fresh perspective to the trading landscape. Here’s 5 things and a detailed look at what you need to know about the TXSE.

A Game-Changer on the Horizon

The Texas Stock Exchange, set to launch in Dallas by 2025, is poised to shake up the financial world. Unlike traditional exchanges like the New York Stock Exchange (NYSE) and Nasdaq, the TXSE aims to provide a competitive and innovative alternative. The exchange is supported by financial giants BlackRock and Citadel Securities, who bring substantial influence and expertise to the table. 

The TXSE plans to offer lower compliance costs and innovative listing standards. This approach is designed to attract a diverse range of companies, particularly those seeking more flexible and cost-effective listing options. By positioning itself as a viable alternative to the NYSE and Nasdaq, the TXSE hopes to draw significant trading volumes and new listings, thereby establishing itself as a major player in the stock exchange market. 

Backed by Big Money

The financial backing for the TXSE is impressive. With $120 million in initial funding, the exchange has the resources to make a significant impact. This funding will support the TXSE’s plans to file for registration with the U.S. Securities and Exchange Commission (SEC) later this year. The goal is to attract global companies, offering them more options and stability than currently available. 

The substantial financial support from BlackRock and Citadel Securities underscores the confidence that major financial institutions have in the TXSE’s potential. These backers are not only providing capital but also lending their expertise and market influence, which will be crucial in navigating the complexities of launching a new stock exchange. 

An interesting dimension to BlackRock’s involvement is its environmental, social, and governance (ESG) policies. BlackRock has faced scrutiny from Texas officials for its stance on ESG principles, particularly those concerning the oil and gas industry. Supporting the TXSE could be seen as an olive branch to Texas, demonstrating a commitment to enhancing market efficiency and liquidity while potentially aligning more closely with Texas’ economic interests. 

The TXSE’s mission is clear: to provide a platform with potentially lower compliance costs and innovative listing standards. This is particularly appealing to corporate issuers and exchange-traded product sponsors who are looking for more efficient and cost-effective ways to list their securities. 

Facing the Giants

Competing with the well-established NYSE and Nasdaq is no small feat. These giants have dominated the market for decades, and any new entrant faces significant challenges. The TXSE’s success will depend on its ability to attract substantial trading volumes and new listings away from these established players. 

Historically, regional exchanges have struggled to maintain independence and often end up merging with larger entities. However, the TXSE is positioning itself differently by focusing on lower compliance costs and innovative listing standards. This strategy could appeal to companies looking for more flexible and cost-effective listing options. 

The TXSE’s ability to capitalize on changes in the equities trading market, such as evolving listing standards and associated costs, will be crucial. By offering more predictable and stable listing conditions, the TXSE hopes to attract a diverse range of companies, including those from the technology and energy sectors, which are prominent in Texas. 

Texas: The Corporate Magnet

Texas has become a magnet for Fortune 500 companies, ranking among the top three states where these companies choose to do business. The state is home to 52 Fortune 500 companies, including recent relocations like Charles Schwab, Tesla, and Hewlett-Packard. This trend has been driven by Texas’ business-friendly environment, favorable tax policies, and robust infrastructure. 

The TXSE aims to capitalize on this trend by targeting Texas-based businesses, especially those backed by private equity and considering going public. The substantial number of Texas companies with public listings or the potential to go public influenced the decision to establish the TXSE in Dallas. 

James Lee, the founder and CEO of TXSE Group, has highlighted the significant number of private-equity-backed companies in Texas. Many of these companies are considering going public, and the TXSE aims to provide them with a flexible and cost-effective platform to do so. By focusing on local businesses and leveraging Texas’ economic strengths, the TXSE hopes to build a robust and diverse portfolio of listings. 

What’s in It for You?

The launch of the TXSE won’t bring immediate changes to your daily financial activities. BentOak Capital and the broader financial industry are in a “wait and see” mode regarding this recent news. The market as you know it will continue as usual, and there are no immediate impacts on everyday investing. 

However, the establishment of the TXSE could bring long-term benefits to investors. The increased competition among exchanges may lead to better services and more options for investors. Additionally, the focus on lower compliance costs and innovative listing standards could attract a diverse range of companies, providing investors with new opportunities. 

 

The Texas Stock Exchange represents an exciting development in the financial world. Backed by substantial financial support and targeting a state known for its business-friendly environment, the TXSE has the potential to become a significant player in the stock exchange market. However, it faces considerable challenges in competing with established giants like the NYSE and Nasdaq. For now, it’s a “wait and see” situation. The TXSE is still in its early stages, and much remains to be seen about its impact.  

 


Please remember to contact BentOak Capital (“BentOak”), in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose, add, to modify any reasonable restrictions to our investment advisory services, or if you wish to direct that BentOak to effect any specific transactions for your account. A copy of our current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.bentoakcapital.com.   

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.   

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.   

Securities offered through LPL Financial, Member: FINRA/SIPC. Investment advice offered through BentOak Capital, a registered investment advisor and separate entity from LPL Financial. 

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