The Texas stock exchange (TXSE) is gearing up to become a significant player in financial markets. They have currently raised over $120 million from both individuals and major investment firms such as BlackRock and Citadel Securities. They aim to lower trading fees, making exchange-based trading more appealing to investors while increasing liquidity and pricing for investors. When fees for trading are reduced, the cost of buying and selling in the market decreases leading to more money being invested more frequently, which therefore increases liquidity. This is what the TXSE is aiming to do as fees in the NYSE increase.
Later this year, TXSE plans to file registration documents with the SEC, planning for its initial listing in 2026. The exchange aims to capitalize on growing dissatisfaction with increasing costs at the NYSE and other large exchanges. As a result, many companies are beginning to relocate or open new offices in states with more favorable taxation and regulatory policies, such as Texas.
Currently, New York and Texas are ties in hosting Fortune 500 companies. However, Texas, specifically Dallas, is growing into one of the most significant financial centers in the country. The favorable business environment in Texas, defined by lower taxes and more affordable living, is attracting companies from New York and other high-cost states. Another very attractive aspect of Texas is that they have no income tax, whereas New York has an income tax rate of 14.8%.
The TXSE plans to be fully electronic while maintaining a physical location in Dallas. One of its strategic goals is to attract listings of exchange-traded products (ETPs), which are securities that track an index or other asset but trade like stocks on an exchange. ETPs provide investors a way to gain exposure to various assets with the flexibility of stock trading.
However, the road to success for TXSE poses many challenges. Historically, many attempts to establish new exchanges have failed due to the dominance of the NYSE. Despite this, the potential benefits of TXSE, along with the growing business migration to Texas, present a threat to the NYSE.
The TXSE presents a promising but uncertain attempt. Its potential to offer lower fees, higher liquidity, and a more business-friendly environment could attract significant listings and reshape the financial industry. While success is not guaranteed, the TXSE is a big development that industry watchers will be strongly observing.
Sources
Driebusch, C. (2024, June 4). New Texas Stock Exchange takes aim at New York’s ... The Wall Street Journal. https://www.wsj.com/finance/regulation/new-texas-stock-exchange-takes-aim-at-new-yorks-dominance-e3b4d9ba
The Editorial Board. (2024, June 6). Wall street moves to Texas - WSJ. The Wall Street Journal. https://www.wsj.com/articles/texas-stock-exchange-txse-new-york-blackrock-citadel-securities-james-lee-bb72c36c
Comments