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Traders work on the floor of the New York Stock Exchange in New York on August 23, 2016. A group of financial firms and investors are planning to launch a stock exchange in Dallas this year.
REUTERS/Brendan McDermid
A group of financial companies and investors plans to launch a private stock exchange based in Texas and offer traders an alternative to the New York Stock Exchange and Nasdaq.
The group, which includes BlackRock, Citadel Securities and about two dozen investors, raised about $120 million in capital to create the Texas Stock Exchange, which would be based in Dallas. They are now looking to register with the US Securities and Exchange Commission to operate as a national stock exchange later this year.
“Texas and the other states in the southeast quadrant have become economic powers. Combined with the demand we are seeing from investors and corporations for expanded alternatives to trading and listing stocks, this is an opportune time to build a major national stock exchange in Texas,” said James Lee, founder and CEO of TXSE Group. .
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Stock exchanges are private institutions where stocks, bonds, and other securities are traded. If the SEC authorizes TXSE to begin trading, it will be the first stock exchange to launch in the country in recent years.
According to the Wall Street Journal, which first reported on the creation of the new exchange, TXSE promises to be more CEO-friendly than other exchanges and wants to capitalize on discontent over the new rules and rising compliance costs at Nasdaq and NYSE.
“If we look at the three states with the largest economies, New York has two stock exchanges. “Texas, compared to California, is growing economically and demographically very quickly, and already has a large number of headquarters for the largest Fortune 500 companies, so it makes sense that Dallas would be an ideal location,” said Steven Pedigo, professor from the University of Texas. at the LBJ School of Public Affairs in Austin and an expert in economic and urban development.
But it could be difficult for a new exchange to take off in the American stock market, where the Nasdaq and the New York Stock Exchange have dominated for decades. The American stock exchange business consists of about 16 stock exchanges; The New York Stock Exchange accounted for more than 20% of stock trading volume in May and the Nasdaq for more than 15%, according to Bloomberg. Nasdaq acquired the Philadelphia Stock Exchange and the Boston Stock Exchange, two of the oldest exchanges in the country, in 2007. The New York Stock Exchange purchased the Chicago Stock Exchange in 2018.
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“What makes this project interesting are the large companies that supported and financed the new stock exchange, so it could be a serious competitor. But it is a story that will ‘continue,’” Pedigo said.
TXSE’s founders said they chose Texas as the home of the new national stock exchange because of the state’s rapid economic and population growth. Texas has been a leader in attracting business relocations and expansions in recent years. More than 7,200 companies moved to Texas between 2010 and 2019, creating nearly 103,000 jobs, according to data from the Federal Reserve Bank of Dallas. Companies that moved to Texas mostly headed to the state’s major metropolitan areas, with Dallas and Houston being the favorite destinations.
Large corporations such as Tesla and Toyota have chosen the state as their new headquarters in recent years. Large financial firms like Goldman Sachs have also made large investments in Dallas lately.
Pedigo said this new stock exchange would not necessarily lead to the creation of more jobs in the state, but it would help further reinforce the pro-business image that Texas has been working on for years.
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Disclosure: The University of Texas at Austin and The University of Texas at Austin – LBJ School of Public Affairs have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in Tribune journalism. Find a complete list of them here.
This article originally appeared in The Texas Tribune at https://www.texastribune.org/2024/06/05/texas-stock-exchange/.
The Texas Tribune is a member-supported, nonpartisan newsroom that informs and engages Texans about state politics and policy. Learn more at texastribune.org.
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