Watch out, Wall Street—a Dallas-based stock exchange is bucking its way into U.S. equity capital markets. And it’s already lined up around $120 million in funding from BlackRock, Citadel Securities, and other investors including “prominent business leaders from around the country.”

TXSE Group announced today that it plans to launch the Texas Stock Exchange (TXSE), focusing on enabling U.S. and global companies to access U.S. equity capital markets. The group says it will provide “a venue to trade and list public companies and the growing universe of exchange-traded products” as a “fully electronic, national securities exchange” that will seek registration with the U.S. Securities and Exchange Commission.

Planning a “more CEO-friendly” exchange with less regulation and diversity rules

The Wall Street Journal broke the news of the planned launch on Tuesday, noting that the TXSE Group is “aiming to take on what they see as onerous regulation at the New York Stock Exchange and Nasdaq,” with a goal to begin handling trades in 2025 and to host its first listing in 2026.

The WSJ said the Texas Stock Exchange plans to leverage dismay at rising compliance costs at the NYSE and Nasdaq—as well as frustration with rules like the Nasdaq’s board diversity requirements.

Aiming for ‘more consistent and reliable markets’

“Changes in equities trading markets are driving more volume to exchanges and more choices for issuers and sponsors,” James Lee, founder and CEO of TXSE Group, said in a statement. “TXSE will ultimately create more competition around quote activity, liquidity and transparency, resulting in more consistent and reliable markets that benefit investors, global issuers, and liquidity providers alike.”

According to his LinkedIn profile, Lee has 30 years of experience in U.S. equity markets, alternative investments, and governance of large public retirement systems and endowments. He’s a managing member of Houston-based JHL Capital Holdings, and served as president of Houston’s Ascendant Advisors from 2009 to 2021.

TXSE Group said the planned launch of the Texas Stock Exchange 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,” the group said. “TXSE intends to expand access to U.S. capital markets for all investors, while providing greater access and alignment for public companies and those seeking access to public capital.”

Focusing on Texas and the Southeast U.S.

The TXSE aims to launch with a focus on the Southeast U.S.—which it defines as Texas, Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina and Tennessee. 

“We’re thrilled to bring to fruition the long-held vision for a national stock exchange in Texas,” Lee said. “Texas and the other states in the southeast quadrant have become economic powerhouses. Combined with the demand we’re seeing from investors and corporations for expanded alternatives to trade and list equities, this is an opportune time to build a major, national stock exchange in Texas.”

The TXSE Group noted that Texas and the states in the nation’s southeast quadrant lead the nation in economic expansion and population growth, “making Texas the clear choice for the establishment of a new national securities exchange.” For decades, Texas has been the nation’s leader in attracting business relocations and expansions, the group added, as well as being home to more Fortune 500 companies than any other state and more than 5,200 private equity-sponsored companies, “many of which are preparing to access the public markets.”

North Texas bristles with Fortune 500 companies

Of course, a lot of those Fortune 500 companies are headquartered right here in North Texas, including AT&T, American Airlines, McKesson, Energy Transfer, Caterpillar, Kimberly-Clark, D.R. Horton, Southwest Airlines, Jacobs Engineering, Celanese, Tenet Healthcare, and more.

The TXSE Group also noted that there are more than 1,500 publicly traded companies throughout the region it’s targeting.

The group said it intends to submit a registration with the SEC to operate as a national securities exchange later this year.

More on the $120M capital raise

More than two dozen investors took part in the group’s capital raise, TXE Group said, “including some of the largest financial institutions and liquidity providers in the world.” The group said its liquidity providers “represent a significant portion of the equity volume on U.S. lit exchanges and together comprise a majority of all U.S. listed retail volume.”

The group said that with the $120 million raised, the Texas Stock Exchange is “expected to be the most well-capitalized exchange entrant to file a registration with the U.S. Securities and Exchange Commission.”

Houston-based WoodRock Securities acted as exclusive financial advisor and sole placement agent for TXSE Group Inc. in the capital raise. Washington, D.C.-based Cravath, Swaine & Moore serves as regulatory counsel to the Texas Stock Exchange. The Dallas office of Haynes and Boone LLP served as counsel to TXSE Group Inc. in the offering and will serve as corporate counsel. PwC Consulting serves as managed services provider for TXSE Group Inc.

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