The Texas Stock Exchange will commence trading on Monday, kickstarting the first real test of one of the most well-funded new exchanges to launch in decades.
The Texas Stock Exchange, a Dallas-based startup, will initiate a phased rollout to take place over the course of July. On Monday, the public can start trading as thousands of stocks come online over the course of the month. By the third quarter, exchange officials hope to have Exchange-Traded Products, or ETPs, listed on the exchange and corporate listings available during the fourth quarter of this year, according to a statement from the exchange.
Both Texas state government and stock exchange officials hope the Texas Stock Exchange, or TXSE, launch will solidify Dallas’ attempt to become a national financial hub and boost the Texas economy by growing the financial services industry in the state and making money for any Texas companies and investors that are doing business through the exchange.
“With the start of full production trading, any last notions that TXSE is theoretical are instantly swept away,” a TXSE official wrote in a statement Thursday.
Monday’s start of trading is critically important to test-run and demonstrate to companies interested in listing on TXSE that it can provide a viable alternative to the New York Stock Exchange and NASDAQ, said Sriram Villupuram, a University of Texas at Arlington associate professor of finance.
“Basic technical things, hopefully will work well,” Villupuram said. “This is the first demonstration. It’s like a new car, a brand new company pushing out their first car. I think they’ll get through it fine, but things can go wrong. This is a high tech exchange at the end of the day.”
While most trading is now done electronically, the location of a stock exchange still matters, said Ray Perryman, president of the Waco-based economic research company The Perryman Group. Investors tend to hold stocks in and trade more on nearby companies, and Texas has both ingredients for a successful exchange — a rapidly growing pool of investors via the growth of the financial sector in the Dallas area, as well as Fortune 500 companies headquartered in the state that they can invest in, he said.
“A homegrown national exchange means more jobs, more investment, and more growth opportunities for businesses and communities across the Lone Star State,” said Gabriela von zur Muehlen, senior vice president and chief policy officer at the Texas Association of Business.
Hype around TXSE has been building since the June 2024 announcement that the exchange intended to launch with $120 million in backing from large investment firms like BlackRock and Citadel Securities. In the time since that announcement, anticipation has only grown as the exchange received federal approval and received further investments from some of the largest financial institutions in the world, now totaling $275 million.
At the same time, financial services in the Dallas area have continued to grow. JP Morgan Chase, Goldman Sachs and Charles Schwab now have thousands of employees based in the region, coined “Y’all Street.”
“The center of gravity for American capitalism is now headquartered in the boom belt,” Gov. Greg Abbott said during a TXSE event in April. “The Texas Stock Exchange is the natural extension of that capitalism.”
Abbott and other state officials have cited the strength of the Texas economy, the eighth largest in the world if it were its own country, as the reason TXSE will succeed where previous exchanges have failed. The second most Fortune 500 companies in the U.S. are headquartered in Texas, leading New York and closely trailing California.
The American investment system has long been centered around the New York Stock Exchange and the NASDAQ, both private exchanges based in New York City.
Perryman said decades of consolidation among regional exchanges have led to what is effectively a NYSE and NASDAQ duopoly for companies that wish to be publicly traded.
Since TXSE announced its intention to launch in Dallas, both the NYSE and NASDAQ have created branches of their exchanges in Texas: NYSE Texas and NASDAQ Texas. TXSE officials say those moves validate TXSE’s efforts and show Wall Street is paying attention to the upstart exchange and strength of Dallas’ growing financial sector.
Villupuram said it will take years of effort before TXSE is a true competitor to NYSE and NASDAQ because of each companies’ decades of expertise and reputation among companies that want to be publicly traded.
The creation of NYSE Texas and NASDAQ Texas, rather, are validations of Texas’ economic strength and the size of the financial sector in the Dallas area, Villupuram added.
“There is genuinely business to be made here, and part of it can also be a fear of missing out,” Villupuram said.
Over the past 20 years, New York has seen a 16% growth in investment banking jobs, compared to a 111% expansion in Texas. Across the entire financial services sector, Texas has more jobs — 939,600 — than New York or California, Perryman said.
“Texas has evolved from being primarily a back-office location into a major hub for technology, operations, wealth management, trading support, and increasingly, some front-office and investment banking functions,” Perryman said.
Regardless of the likelihood of TXSE breaking into the NYSE and NASDAQ duopoly, the competition of exchanges in Texas will create a feedback loop that leads to greater investment in Texas companies and more jobs in the financial services sector, Perryman said.
The exchange will be entirely digital but have a physical presence in Dallas, recently signing a lease at the Bank of America Tower in the Uptown neighborhood of Dallas, the Dallas Business Journal reported in May.
TXSE has announced a handful of Exchange-Traded Products, or ETPs, that will be listed on the exchange. Unlike an individual company stock, ETPs allow investors to buy into an entire market, like the S&P 500, oil or gold.
The company is yet to announce any corporate listings, although officials said those will come later this summer and into the fall as the launch of corporate listings gets closer.
Drawing those corporate listings to the exchange will be crucial to TXSE’s long-term survival, Villupuram said. Stock exchanges primarily generate revenue through listing fees collected by companies that are listed on an exchange, he added.
Both NYSE and NASDAQ have strict requirements companies must meet to be listed on the exchanges, including benchmarks for financial solvency, corporate transparency and regulatory compliance. That’s a high bar for companies to meet and achieving those requirements shows a company’s maturity, Villupuram said, but it can also effectively limit the ability of smaller companies to access investors through the NYSE and NASDAQ duopoly.
The $275 million in startup funds is a significant amount of money for a new exchange, Villupuram said, but he also noted that the technology to start and operate an exchange is incredibly expensive. Hundreds of billions of dollars flow through the NYSE and NASDAQ on any given day that markets are open.
As a comparison point, the annual salary of the New York Stock Exchange Group CEO is more than $6 million. NYSE operates as a subsidiary of Intercontinental Exchange, which pays its CEO more than $22 million annually.
“There will be several years and years of slowly growing, attracting more listings,” Villupuram said. “So compared to those big ones, it’s maybe not a lot, but from where TXSE is starting and investing, it’s significant.”
TXSE is starting slow with the goal of building toward solvency over time.
All National Market System symbols — such as TSLA for Tesla Inc. — should be available to be traded on TXSE by the end of July as they are slowly rolled out, a TXSE official said. There are more than 12,000 publicly traded stocks available to investors in the U.S., according to financial services company Motley Fool.
Although the ringing of a bell typically symbolizes the start of the trading day in a stock exchange, there will be no bell ringing on Monday in Dallas. If all things go as planned this month, exchange officials hope to have one on hand during a celebration in the near future.
Disclosure: Texas Association of Business and University of Texas – Arlington have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
