Eyebrows are raised and interests piqued at the announcement of the new Dallas-based stock exchange, TXSE. TXSE is backed by individual and institutional investors like Citadel Securities and BlackRock and funding has amounted to $120 million, making TXSE one of the most well-capitalized exchanges to file with the SEC. TXSE aims to file by the end of the 2024, facilitate trades for existing public companies in 2025 and list new companies by 2026.
So, why create a new exchange when such storied US-based exchanges like NYSE and NASDAQ are still in existence? The founder of TXSE Group Inc., James Lee, argues that there is real opportunity to serve the over 5,200 private companies based in Texas and the greater southeast quadrant. However, TXSE is not the first exchange to attempt to target a regional market; Chicago Stock Exchange and Philadelphia Stock exchange were created with similar ambitions only to be folded into NYSE and NASDAQ. Given the fact that Texas’ $2.4 trillion economy is the 8th largest in the world and continues to enjoy substantial growth due to its corporate-friendly regulations and tax-friendly policy, perhaps it will not suffer a similar fate.
Another differentiator for TXSE is that—in contrast to NASDAQ and NYSE—they aim to streamline compliance costs and will not enforce board seat requirements for the companies they list. While you may read otherwise in opinion pieces, Lee purports that the creation of this exchange is apolitical and is intended to solve for the dissatisfaction listing companies have felt about the rules and restrictions set out by other exchanges.
So, what can you make of this news as an investor? It is advantageous to have expertise in the various trading venues, which the fund managers Apella Wealth invests in are adept at maneuvering. While a stock may be listed with a certain exchange (like NASDAQ, NYSE, or the soon-to-be TXSE), they may trade on several exchanges. As an example, gathered from Dimensional Fund Advisor’s research team, approximately 62% of the average trade volume from stocks listed on NASDAQ were traded on non-NASDAQ exchanges. For this reason, working with fund managers like Dimensional can help ensure we receive the most efficient and cost-effective execution on trades for our clients—regardless of which exchange a company is listed under.
Curious to learn more about various stock exchanges and their relationship to your investments? Give us a call!
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Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted.
Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. A copy of Apella’s current written disclosure brochure filed with the SEC which discusses among other things, Apella’s business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. No current or prospective client should assume any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.