The Texas Stock Exchange Aims to Buck Wall Street

Kristian Kerr | Head of Macro Strategy

Last Updated:

Additional content provided by John Lohse, CFA, Senior Analyst. 

The Texas Stock Exchange (TXSE) is saddling up as a new electronic stock exchange to be located in Dallas. Underpinned by a significant investment of $120 million from industry heavyweights like BlackRock and Citadel Securities, the TXSE aims to shake up the status quo and provide another competitive alternative to the globally recognized New York Stock Exchange (NYSE) and NASDAQ. 

A Fresh Perspective 

The TXSE intends to bring a fresh perspective to the world of finance, capitalizing on the growing dissatisfaction among companies with escalating compliance costs and regulatory burdens associated with listing on the NYSE and NASDAQ. By leaning into Texas's business-friendly environment and favorable tax policies, the TXSE plans to offer a more cost-effective and less intrusive alternative for companies seeking to go public or trade their shares in the secondary market. The exchange plans to court businesses, particularly those from the southern U.S., and list ETFs and American Depository Receipts (ADRs) as well as traditional stocks. 

Overcoming Challenges 

While the TXSE's prospects are exciting, the exchange will face significant challenges in its quest to disrupt the industry. Attracting listings from established companies and achieving sufficient trading volumes and liquidity will be crucial for its success, along with proving its credibility and transparency, which are major staples of the NYSE and NASDAQ. Additionally, the TXSE must navigate the lengthy regulatory approval process with the U.S. Securities and Exchange Commission (SEC), which has been a stumbling block for previous upstart exchanges. It plans to register with the SEC later this year, and if successful, begin trading operations in late 2025, and list its first companies in 2026.  

Economic Impact 

Local businesses and state leaders have shown favor for the project as it is expected to have a meaningful impact on the economy in Dallas and the broader Dallas-Fort Worth (DFW) area. Once fully operational, the exchange plans to employ around 100 people in its Dallas headquarters, contributing to job creation and economic growth in the area, even beyond those directly employed by the exchange given the potential for conferences, business investment, and media.   

A New Era of Competition 

The establishment of the TXSE marks a significant shift in the financial landscape of Texas and beyond. Like so many other budding businesses that it hopes to service, the TXSE is eager to disrupt and grow. As it prepares to take on the New York establishment, all eyes will be on its development and the potential transformation it could bring to the financial landscape of Texas and the region. Whether it can truly challenge the dominance of the NYSE and NASDAQ remains to be seen, but the TXSE's emergence underscores a burgeoning move in the industry back towards decentralization in true capitalist spirit. 

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Kristian Kerr

Kristian Kerr drives the broad, house investment strategy for LPL Financial Research. His career includes over 25 years of industry experience.