As Texas Stock Exchange (TXSE) Prepares to Launch

The Texas Stock Exchange (TXSE) is making bold moves to position itself as a formidable challenger to the long-established financial platforms in New York, such as the New York Stock Exchange (NYSE) and Nasdaq. In a significant step toward its anticipated launch next year, the exchange announced on Monday the formation of its board of directors, drawing experienced industry leaders from both regulatory and corporate backgrounds.

This development is part of TXSE’s larger ambition to create a national stock exchange that could potentially disrupt the decades-old dominance of Wall Street.

TXSE first gained attention in June 2024 when it announced plans to officially register with the U.S. Securities and Exchange Commission (SEC), a requirement for national stock exchanges in the U.S.

Key Backers and Financial Muscle

The exchange has already secured backing from two of the most influential names in finance: BlackRock, the world’s largest asset manager, and Citadel Securities, a global market-making firm that has become a powerhouse in the world of trading.

The combined weight of these backers, along with TXSE’s initial funding of around $120 million, provides the platform with a strong financial foundation to compete with the likes of NYSE, which is a division of Intercontinental Exchange (ICE), and Nasdaq.

A Powerhouse Board

Heading TXSE’s newly formed board is Rick Perry, former governor of Texas and U.S. energy secretary. Perry’s involvement adds political clout and experience navigating high-level regulatory environments, both of which could prove advantageous as the exchange seeks approval from the SEC and other regulatory bodies.

Perry is joined by several high-profile figures, including Rick Roberts, a former SEC commissioner, who brings a deep understanding of the regulatory landscape and how the SEC functions—a critical asset for a new stock exchange looking to break into the highly regulated U.S. financial markets. Alex Bussandri, the global head of strategy at Citadel Securities, also takes a seat on the board, adding strategic depth from one of the world’s most advanced trading firms.

Seasoned Leadership Team

To further bolster its credentials, TXSE has drawn top talent from other major exchanges and trading platforms. Notably, Cam Smith, who has been appointed global head of trading and co-president of the exchange, has a wealth of experience in electronic and automated trading systems. Smith previously served as president of Quantlab, a firm known for its cutting-edge, algorithm-driven proprietary trading. His role at TXSE will be central to shaping the exchange’s technological infrastructure, which is expected to focus heavily on speed, efficiency, and innovation, key aspects of modern-day trading.

Another pivotal figure in TXSE’s leadership team is Jeff Brown, who is serving as general counsel and chief regulatory officer. Brown is no stranger to high-stakes regulatory environments, having previously worked as acting general counsel at Charles Schwab, one of the largest brokerage firms in the U.S. His role will be crucial in steering the exchange through its SEC registration process and ensuring full compliance with U.S. securities laws. Brown’s experience also provides TXSE with a regulatory safeguard, which will help the platform gain the trust of investors and traders.

The Need for Competition in U.S. Stock Exchanges

The introduction of the Texas Stock Exchange could mark a significant moment in the evolution of the U.S. financial markets, which have historically been dominated by the NYSE and Nasdaq. While these two platforms have set the standard for trading equities for decades, critics have argued that the U.S. stock exchange landscape could benefit from greater competition, especially given the consolidation of trading power in a few hands.

TXSE’s attempt to rival these behemoths comes at a time when market participants are increasingly seeking alternative platforms that can offer lower trading fees, faster execution times, and more transparency. NYSE and Nasdaq have faced criticism in recent years over issues such as high listing fees, complex market structures, and what some market participants view as a lack of innovation.

The Texas Stock Exchange could capitalize on these market inefficiencies by offering a fresh, streamlined alternative that is more agile and responsive to the needs of modern traders. The involvement of Citadel Securities, a leader in market-making and electronic trading, suggests that TXSE will heavily emphasize cutting-edge technology and algorithm-driven trading—a crucial factor in attracting both institutional and retail investors.

A Texas Identity in the Financial World

While NYSE and Nasdaq have long been synonymous with Wall Street, TXSE’s emergence underscores a broader trend of decentralization in the U.S. financial markets. Texas, with its business-friendly policies, low taxes, and rapidly growing tech sector, has become an increasingly attractive location for major corporations, particularly in finance and technology.

The state’s appeal was made evident during the COVID-19 pandemic when companies like Oracle, Tesla, and HP relocated their headquarters from California to Texas. The world’s richest man Elon Musk has also made the State the headquarters of some of his companies, including X, which he recently moved from San Francisco.

Rick Perry’s presence on the board highlights Texas’ potential to become not just a national but a global financial hub. Perry, a longtime advocate of Texas as a business-friendly environment, will likely leverage his extensive network and political influence to promote TXSE as a major player on the world stage.

The Market Comes with Challenges

While TXSE’s ambitions are lofty, it faces significant hurdles. The U.S. stock exchange market is highly competitive and deeply entrenched, with NYSE and Nasdaq enjoying the advantage of decades of trust, liquidity, and infrastructure. Building the same level of trust and attracting major companies to list on TXSE will require time, effort, and an aggressive marketing strategy.

Moreover, the exchange will need to navigate a complex regulatory landscape. While TXSE is backed by experienced figures like Rick Roberts and Jeff Brown, its application to the SEC will undergo intense scrutiny. The SEC will want to ensure that the new exchange adheres to stringent market rules, offers investor protections, and has the necessary financial and technological resources to function without disrupting the market.

There is also the challenge of attracting both companies and traders to the platform. NYSE and Nasdaq offer liquidity and a broad investor base that new exchanges struggle to match. However, TXSE’s strategic partnerships and its emphasis on advanced trading technology could help it stand out as a more nimble alternative, particularly for tech-driven companies and investors.