Texas Stock Exchange (TXSE) Arrives as New Player from BlackRock and Citadel Securities

Bittime - The world of the United States stock exchange will welcome a new player. TXSE Group, backed by investment giants BlackRock and Citadel Securities, plans to launch the Texas Stock Exchange (TXSE) in Dallas.

This stock exchange aspires to become a competitor to established stock exchanges based in New York, such as the New York Stock Exchange (NYSE) and Nasdaq.

TXSE will Register with the SEC

TXSE, which has raised about $120 million, plans to register with the United States Securities and Exchange Commission (SEC) to operate as a national securities exchange later this year. They hope that the presence of TXSE can attract global companies to take the floor there.

The surge in activity in the capital market has encouraged many companies, both from within and outside the United States, to take the floor on the stock exchange. This certainly creates greater opportunities for stock index managers.

However, carving out a place in the lucrative stock listing market in the United States is not easy. NYSE and Nasdaq have dominated this market like a duopoly since the 2000s.

TXSE Must Be Careful

"Competition always brings positives and the presence of TXSE is not a competitor to be underestimated," said JJ Kinahan, CEO of IG North America and president of online brokerage Tastyworks. "However, keep in mind that many other players have tried, and in the end, opening a stock exchange is not an easy thing."

Several large regional stock exchanges, such as the Philadelphia Stock Exchange, Boston Stock Exchange, and Chicago Stock Exchange, have merged into the Nasdaq or NYSE after the SEC implemented rules favoring automated trading platforms.

"It's difficult to wrest significant market share from incumbents, both in terms of trading and listing," said Owen Lau, senior analyst at Oppenheimer & Co. "Several other stock exchanges tried, but most failed to achieve their initial expectations."

Control of NYSE and Nasdaq

Trading volume, which is an important indicator of stock exchange strength, is also concentrated in the two industry giants, NYSE and Nasdaq. This makes it difficult for stock exchanges with low trading volumes to attract large orders from traders.

However, James Lee, founder and CEO of TXSE Group, sees changes in the stock trading market. The shift in stock listing standards and associated costs, he argues, actually creates more trading volume and provides more choices for stock issuers and sponsors.

Companies seeking to list on stock exchanges and sponsors of exchange-traded fund (ETF) products are increasingly demanding stability and certainty regarding stock listing standards and associated costs.

Furthermore, TXSE, according to a Wall Street Journal report, wants to attract interest in ETF listings and challenge the ever-increasing compliance costs on major United States stock exchanges, as well as new rules such as setting diversity targets for the board of directors on Nasdaq.

The Impact of the Appearance of TXSE

"TXSE will ultimately create more competition in pricing activity, liquidity and transparency, resulting in a more consistent and trustworthy market," added Lee.

Texas is known as a conservative-leaning state. They have previously restricted public pension funds from doing business with BlackRock and other Wall Street firms that support environmental, social and governance (ESG) principles.

As sustainable investing becomes more prominent, existing stock exchange operators are increasingly focusing on ESG business opportunities and launching new initiatives.

BlackRock and Texas relations

BlackRock's relationship with Republican-leaning Texas officials has been complicated in recent years. BlackRock, which is a major investor in oil companies such as Exxon, has resisted calls to divest from holdings in fossil fuel companies.

They have even been accused of “boycotting” certain industries for calling for broader emissions disclosures from companies in their portfolios.

In February, BlackRock CEO Larry Fink joined Texas Deputy Governor Dan Patrick at an event in Houston to encourage infrastructure investment. However, the following month, a state fund withdrew $8.5 billion from BlackRock management, citing the company's energy policies.

"BlackRock is proud to be a founding investor in the Texas Stock Exchange to increase liquidity and improve market efficiency on behalf of clients and other investors in the United States capital markets," a company spokesperson said.

Citadel also supports TXSE

Citadel Securities, which also supports TXSE, has previously supported several stock exchanges that focus on different assets, such as Members Exchange in the equity and options sector, FMX Futures Exchange, and EDX Markets in the crypto sector.

Will TXSE be able to compete with the established NYSE and Nasdaq? Time will answer. However, the presence of TXSE as a new player could be a breath of fresh air for the world of the United States stock exchange and provide space for innovation and healthier competition.

Predictions and Analysis: Will TXSE Be Able to Change the Landscape of the US Stock Exchange?

The emergence of the TXSE as a new player on the United States stock exchange raises the question: will they be able to catch the NYSE and Nasdaq?

Some analysts doubt TXSE's ability to capture significant market share. They argue that the NYSE and Nasdaq have been around for decades and have advantages in terms of, namely:

• Reputation and Trust: Investors are familiar with and trust the proven trading mechanisms of the NYSE and Nasdaq.
• Liquidity: These two giant stock exchanges have much higher trading volumes, making it easier for market players to buy and sell shares quickly and efficiently.
• Network and Infrastructure: The NYSE and Nasdaq have well-established distribution networks and technology infrastructure, which can provide an advantage in terms of trading speed and reliability.

Luck Factor for TXSE

However, the presence of TXSE also has the potential to bring a breath of fresh air to the United States stock exchange. Several factors that might support TXSE include:

• Focus on Issuer Needs: TXSE offers more flexible stock listing standards and more competitive fees, so it can attract the interest of companies that feel underserved by the NYSE and Nasdaq.
• Latest Technology: The new stock exchange may leverage the latest technology to offer a faster, more efficient and transparent trading platform.
• Opportunities in Specific Segments: TXSE can focus on certain market niches, for example technology companies or growing companies, which are not yet well served by existing stock exchanges.

TXSE's Way to Survive

Ultimately, TXSE's success will depend largely on their ability to:

Attracting Quality Issuers: TXSE needs to attract companies that are well established and have good growth prospects to be able to compete with the NYSE and Nasdaq.

Building Investor Confidence: Investors should be assured that TXSE offers a safe, fair and efficient trading platform.

Innovate and Adapt: TXSE needs to continue to innovate and adapt to technological developments and regulations in the financial sector.

Conclusion: Healthy Competition for US Capital Markets

The launch of the Texas Stock Exchange is an interesting development to follow. Despite facing tough challenges from incumbents, TXSE has the potential to bring positive change to the United States stock exchange.

With healthy competition, investors can benefit from more efficient and innovative trading platforms. Let's just wait and see how TXSE progresses in the future and whether they are able to change the competitive landscape on the United States stock exchange.

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