A group of Wall Street investors including BlackRock and Citadel Securities are backing plans to launch a national stock exchange in Texas that would offer an alternative to the New York Stock Exchange and Nasdaq where regulations and costs have been increasing.
TXSE Group plans to file registration documents with the Securities and Exchange Commission for the Texas Stock Exchange later this year after raising $120 million from more than two dozen investors. TXSE Group also expects to have its headquarters and executive offices in Dallas and a local data center.
“With approximately $120 million of capital raised, TXSE is expected to be the most well-capitalized exchange entrant to file a registration with the U.S. Securities and Exchange Commission,” said James Lee, founder and CEO of TXSE Group, in a LinkedIn post on Wednesday.
TXSE Group’s investors include some of the world’s largest financial institutions and liquidity providers — such as BlackRock and Citadel — as well as prominent undisclosed U.S. business leaders, according to a statement. The move could attract financial firms to the area and solidify the reputation of the Dallas area as a national financial center.
Lee, who started his investment banking career decades ago at First Boston and Lehman Brothers, said in a statement that changes in equities trading markets are driving more volume to exchanges and more choices for issuers and sponsors.
“TXSE will ultimately create more competition around quote activity, liquidity and transparency, resulting in more consistent and reliable markets that benefit investors, global issuers and liquidity providers alike,” said Lee, who is based in Houston.
Texas Stock Exchange is targeting states in the southeast quadrant of the United States that have “become economic powerhouses” and lead the nation in economic expansion and population growth, Lee said.
Texas had more Fortune 500 companies headquartered within its borders than any other state in 2022 and 2023, but lost the title this year to California. California is home to 57 of the largest publicly traded U.S. companies by revenue, while Texas tied with New York by claiming 52 headquarters on Fortune 500’s 2024 list.
TXSE Group will be a fully electronic exchange without a physical trading floor, but it will have a location in downtown Dallas that serves as the front of the exchange, the company told the Dallas Morning News. TXSE Group declined to comment to CoStar News beyond the Wednesday statement.
The upstart stock exchange could grab a bigger share of the financial services industry in the face of rising regulations, and what Lee told the Wall Street Journal will be a “more CEO-friendly” alternative to the NYSE and Nasdaq.
“This will be a big deal,” Site Selection Group CEO King White told CoStar News, speaking generally about the market. “I wouldn’t be surprised if they buy a building in downtown Dallas and own it. They can choose where they want to go and get a good deal.”
He added that “Dallas has become a secondary U.S. financial hub with Goldman Sachs putting a big campus here and there already being a strong financial services industry,” White said, adding he expects TXSE to have a similar effect on Dallas as the Chicago Mercantile Exchange has had in Chicago with a cluster of financial firms near that hub.
Most real estate investment trusts trade on public stock exchanges, bringing what could be a competitive funding source to REITs that have previously been undervalued by investors.
Texas Stock Exchange’s target area includes Texas, Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina and Tennessee, according to the statement.
Texas is home to more than 5,200 private equity-sponsored companies, many of which are preparing to access the public markets, making the Lone Star State “the clear choice for the establishment of a new national securities exchange,” according to the statement.
In addition, there are more than 1,500 publicly traded companies throughout the region.
TXSE said it will serve as a venue to trade and list public companies and the “growing universe of exchange-traded products.” The planned launch comes as corporate issuers and exchange-traded product sponsors are demanding more stability and predictability around listing standards and associated costs, TXSE said.
“This is an opportune time to build a major, national stock exchange in Texas,” Lee said.
