New York Stock Exchange

Texas is Coming for Wall Street with a New BlackRock-Backed Stock Exchange

A new national stock exchange, based in Dallas and supported by financial giants like BlackRock and Citadel Securities, is gearing up to challenge the dominance of the New York Stock Exchange and Nasdaq.

The newly established TXSE Group has announced its intention to file for registration with the US Securities and Exchange Commission (SEC) later this year. Backed by over two dozen investors with $120 million in funding, it is the most well-capitalized exchange entrant ever to file with the SEC.

“We’re thrilled to bring to fruition the long-held vision for a national stock exchange in Texas,” said James Lee, TXSE Group founder and CEO, in a statement on Wednesday. “Texas and other southeastern states have become economic powerhouses. With the rising demand from investors and corporations for expanded trading and listing options, this is an ideal time to establish a major national stock exchange in Texas.”

The TXSE Group aims to capitalize on the more than 5,200 private equity-sponsored companies in the region that might seek to go public. Lee told The Wall Street Journal that the group hopes to officially launch the exchange in 2026.

The Decline of Public Listings in the US
The number of public companies in the US has halved since the 1990s. In 1996, there were 8,000 companies listed on US exchanges, a figure that has now dropped to around 3,700, according to the Center for Research in Security Prices.

This decline isn’t due to a reduction in the number of companies but rather an increasing tendency for businesses to stay private. Factors such as intensified reporting requirements, higher litigation expenses, costly regulations, stringent board governance, shareholder activism, heightened public scrutiny, and the pressure of quarterly earnings reports have driven companies away from public markets.

There are currently about five times as many private equity-backed firms in the US as publicly held companies, according to Wells Fargo economists. The trend has been growing for some time; in 1999, the average US technology firm went public after four years, but by 2019, that figure had risen to 11 years.

“Companies that remain private can avoid the burden and cost of regulatory requirements and focus on long-term strategic plans,” Wells Fargo economists noted.

JPMorgan Chase CEO Jamie Dimon expressed concern about this trend in his annual shareholder letter in April, stating, “This trend is serious. We really need to consider: Is this the outcome we want?”

TXSE Group’s Vision for the Future
The TXSE Group hopes to alleviate some of the burdens that discourage companies from going public. In a press release on Wednesday, the group stated, “TXSE’s planned launch comes as changes in the equity markets provide an opportunity for greater alignment and more competition. Corporate issuers and exchange-traded product sponsors are demanding more stability and predictability around listing standards and associated costs. TXSE intends to expand access to US capital markets for all investors, while providing greater access and alignment for public companies and those seeking access to public capital.”

While New York City hosts the most popular exchanges in the US, there are approximately 13 stock exchanges nationwide, including in Philadelphia and Miami. The new Texas-based exchange, according to Lee, would primarily serve businesses located in Texas and the southeastern quadrant of the United States.

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