Challenging Wall Street… U.S. Texas Stock Exchange to begin operations next year

Texas Stock Exchange begins preparations to launch after SEC approval

New exchange concept born from complaints about NYSE and Nasdaq regulation

Tesla, Schwab headquarter moves… Texas accelerates corporate-friendly strategy

Wall Street heavyweight investors participating… raised at least 160 million dollars

The Texas Stock Exchange (TXSE), a listing exchange headquartered in Dallas, Texas, is preparing for an official launch as it challenges the dominance of New York’s Wall Street.

The Texas Stock Exchange (TXSE) said on the 30th (local time) that it received approval from the U.S. Securities and Exchange Commission (SEC) to operate as an exchange, paving the way to begin listing stocks next year.

The idea for the Texas Stock Exchange (TXSE) originated from some listed company executives complaining that the New York Stock Exchange (NYSE) and Nasdaq impose excessive regulation.

Moreover, the moves by companies such as Tesla and Charles Schwab to relocate their headquarters to Texas have fueled this idea. Last year, Texas also created a new court dedicated to corporate matters. The goal is to compete with the long-established Delaware Chancery Court, which specializes in U.S. corporate law.

Earlier this year, the NYSE said it would convert the Chicago Stock Exchange through re-registration into "NYSE Texas," with its headquarters in Dallas. Last year, Nasdaq also appointed senior officials in the area.

However, building a competitive new exchange is expected to be difficult. TXSE will be a fully electronic exchange headquartered in Dallas. It will need to attract a substantial level of trading volume, which could be a challenge.

TXSE said it has raised about 160 million dollars and is currently seeking additional funding, according to The Wall Street Journal (WSJ). The funds came not only from Wall Street heavyweights such as BlackRock, Citadel Securities, and Charles Schwab, but also from a vehicle linked to Energy Transfer Partners co-founder billionaire Kelcy Warren.

Other investors include TXSE CEO James Lee and El Paso-based investment firm Franklin Mountain Investments, founded by oil and gas billionaire Paul Foster. Warren and Foster are both strong supporters of President Trump.

CEO Lee said TXSE filed its application with the SEC in January after meeting with executives who had voiced grievances. Their complaints included uncertainty over listing-related regulatory procedures, the resulting costs, and concerns about proxy voting procedures.

Earlier this year, Texas Governor Greg Abbott signed a bill to make the state more business-friendly. This includes a law that makes it harder to bring lawsuits against directors of companies legally incorporated in Texas. Another law allows national (nationwide) public companies headquartered in Texas, or listed on a Texas-based exchange, to set higher ownership thresholds for shareholders to submit proposals.

The rules proposed by the exchange differ slightly from those of the two major U.S. exchanges, the New York Stock Exchange and Nasdaq. For example, TXSE stated in its proposal that companies must maintain a minimum share price of $4 to remain listed, which is a higher requirement than the $1 threshold of the NYSE or Nasdaq.

New York = Park Shin-young, correspondent nyusos@hankyung.com