Texas wants to end the duopoly of the New York Stock Exchange and Nasdaq. With the hook of a somewhat more lax regulation and lower commissions, the southern State has launched the project of a new Stock Exchange, the Texas Stock Exchange (TXSE), based in Dallas, taking advantage of the economic strength of Texas and the fed up of some companies with regulatory demands and high rates on Wall Street. TXSE Group has raised $120 million to launch the new market, which it hopes to register with the United States Securities and Exchange Commission (SEC) this year and begin operating in 2025. Its success is not guaranteed. Investors prefer to trade in markets where liquidity is concentrated and it is not easy to gain a foothold in a business that has tended towards concentration in recent decades.
Behind the idea of the Texas Stock Exchange, there are differences of concept about business and the way in which ESG (environmental, social and corporate governance) criteria should mark the management of companies. “We want to make sure that Texas is going to offer the opportunity to expand capitalism to companies whose only agenda is capitalism, as opposed to other ideologies that may be imposed on them by these other exchanges,” said the governor, Greg Abbott, in an interview with CNBC. A market, in principle, more right-wing than those in New York, without concessions to inclusion, diversity or sustainability.
TXSE has successfully closed its initial financing round this month. The company announced that more than two dozen investors have participated, including some of the largest financial institutions and liquidity providers in the world, such as BlackRock and Citadel Securities, as well as “prominent business leaders from across the country.” that has not been identified. The liquidity providers supporting TXSE represent a significant portion of the share volume on US exchanges and the majority of retail trading, according to the company promoting the project.
BlackRock is one of the companies that has been penalized in Texas by a new regulation that marginalizes entities that adopt ESG sustainability criteria. Along with other financial giants, it took a step back from committing to those criteria a few months ago under pressure from Republicans. Texas Governor Gregg Abott believes that the firm is trying to clean “the stain on its reputation” for having embraced ESG criteria so decisively in the past, as stated. This gives an idea of how the tables have turned: before those who were not committed to those principles were singled out and now conservative fronts accuse those who adopt them.
Citadel, for its part, is owned by Ken Griffin, a prominent Republican donor. It is the largest hedge fund in the world and has also made the decision to move its operational headquarters from northern Chicago to Miami, Florida, attracted by taxation and regulation.
Some companies are upset with the increasing pro-diversity regulations advocated by New York markets. The Nasdaq has established a rule for the composition of councils which requires explanations if you do not have a female advisor and a member of an underrepresented minority or the LGBT community. “The goal of Nasdaq is to shame companies into adopting the values of the political left,” he indicated. The Wall Street Journal in the editorial he dedicated to the new Texan market.
Elon Musk, head of Tesla and SpaceX, is one of the businessmen who has most actively attacked what He calls it the “mental woke virus.” in reference to progressive positions. “Sounds promising,” he wrote. in reference to the new Texas market in response to another tweet from Michael Dell, founder and head of the computer company that bears his last name and is based in Texas, in which he asked for more details about the new project. Tesla has just completed the transfer of the legal domicile of Tesla – which is listed on the Nasdaq – from Delaware to Texas, where the operational headquarters were already located, after being approved by the shareholders’ meeting by a large majority.
Creating a new market is not easy. Recent projects have failed, although they did not have the support of such powerful partners. Apart from the New York Stock Exchange and the Nasdaq, the only market with a significant trading share is the Chicago Board Options Exchange (CBOE), with 12%. The movement has been rather the opposite: the absorption of markets, such as those of Philadelphia, Boston and Chicago (CHX) by the two giants. The Texas Stock Exchange, with an electronic market, will accept the double listing of companies already present on the New York Stock Exchange and the Nasdaq, but will also seek to attract its own listings and will have an exchange-traded fund (ETF) business and admission to listing of foreign companies through depositary receipts (ADR).
“Changes in the equity trading markets are driving greater volume to exchanges and more options for issuers and sponsors,” said James Lee, founder and CEO of TXSE Group, in the statement announcing the result of the financing round. “TXSE will ultimately create more competition around listing activity, liquidity and transparency, resulting in more consistent and reliable markets that will benefit investors, global issuers and liquidity providers alike.”
Although Lee denies political motivations, the Texas governor does not hide them: “We have to ensure that Texas companies and those in a similar situation are not excluded from the New York capital markets by political decisions made from the left in places like New York.”
Financial hub
The Dallas-Fort Worth axis has become a prominent financial center, with tens of thousands of workers in the sector, attracted by the regulatory and fiscal environment. Bank of America and JP Morgan Chase have more than 10,000 employees there; Goldman Sachs, Citi, Wells Fargo, Fidelity, Charles Schwab and State Farm Insurance have between 5,000 and 10,000; and professional services and consulting firms such as EY, PwC, Deloitte and Accenture, between 2,500 and 5,000, according to data from the Dallas Chamber of Commerce.
52 of the Fortune 500 companies, the classification of the largest American companies, are based in Texas. They are the same ones that operate from New York and the number is only behind the 57 in California, according to data published this month. ExxonMobil, McKesson, AT&T, Dell, Tesla, ConocoPhillips, Occidental Petroleum, Caterpillar, Hewlett Packard Enterprise, Oracle (although after several years there it has decided to move to Nashville, Tennessee), American Airlines, Southwest Airlines and Texas Instruments, among many others, They have their headquarters there. According to data from the Dallas Federal Reserve, Texas and Florida have led the attraction of companies from other States.
TXSE’s focus is not limited to Texas, but is placed on the entire southeastern quadrant of the United States, which would also include Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina and Tennessee , as the firm expressly states. With the absence of Virginia, these States coincide almost exactly with those that were part of the Confederacy in the Civil War. Now a financial battle arises, partly again between North and South.
Follow all the information Economy and Business in Facebook and xor in our weekly newsletter
Subscribe to continue reading
Read without limits
_
#North #South #Texas #Stock #Exchange #challenges #Wall #Street