TXSE Group, backed by BlackRock and Citadel Securities, plans to launch Texas Stock Exchange based in Dallas, the company said on Wednesday.
The exchange, which has raised about $120 million, plans to file registration documents with the U.S. Securities and Exchange Commission to start operating as a national securities exchange later this year, the company said.
A rebound in capital markets has sent a plethora of companies from within and outside the United States scrambling to list their stocks, especially on major U.S. indices such as the New York Stock Exchange and the Nasdaq.
“Changes in equities trading markets are driving more volume to exchanges and more choices for issuers and sponsors,” said James Lee, founder and CEO of TXSE Group.
Corporate issuers and exchange-traded product sponsors are demanding more stability and predictability around listing standards and associated costs, TXSE said.
The Texas stock exchange aims to attract listings of exchange-traded products and challenge increasing compliance costs at the Nasdaq and the NYSE, as well as newer rules including setting targets for board diversity at the Nasdaq, as per a report from the Wall Street Journal on Tuesday.
“TXSE will ultimately create more competition around quote activity, liquidity and transparency, resulting in more consistent and reliable markets,” Lee added.
Texas has been at the forefront of politically “red” states restricting their public pension funds from doing business with BlackRock and other Wall Street firms that have embraced environmental, social and governance (ESG) principles.
With the growing prominence of sustainable investing, existing exchange operators have increased their focus on ESG business opportunities and are increasingly rolling out new initiatives.
BlackRock has had a complicated relationship with the officials of the Republican-leaning state of Texas in recent years.
The company, which is a major investor in oil companies such as Exxon and has rejected calls to divest fossil fuel holdings, faces accusations of “boycotting” certain industries due to its call for wider emission disclosures from its portfolio companies.
In February CEO Larry Fink appeared with Texas Lt. Governor Dan Patrick at an event in Houston to stoke infrastructure investments. But the next month, a state fund withdrew $8.5 billion from BlackRock’s management, citing BlackRock’s energy policies.
“BlackRock is proud to be a founding investor in the Texas Stock Exchange to increase liquidity and improve market efficiency for clients and other investors in the U.S. capital markets,” a company spokesperson said.
Prior to Texas Stock Exchange, Citadel Securities has backed some exchanges focused on different assets such as Members Exchange (MEMX) in equities and options, FMX Futures Exchange and EDX Markets in crypto.
(Reporting by Angela Christy, Disha Mishra and Jaiveer Shekhawat in Bengaluru and Ross Kerber in New York; Additional reporting by Gursimran Kaur; Editing by Varun H K, Nivedita Bhattacharjee and Shinjini Ganguli)