The Texas Stock Exchange

 Wall Street Journal:

New York politicians, watch out. A new stock exchange based in Texas could soon challenge Nasdaq and the New York Stock Exchange—and the Empire State’s status as America’s financial capital.

The TXSE Group on Wednesday announced it has raised $120 million for a new electronic trading platform dubbed the Texas Stock Exchange (TXSE). Its investors, including BlackRock and Citadel Securities, “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. (A lit exchange is an open and public one, in contrast to a so-called dark pool of capital.)

That’s a strong vote of confidence in the Texas exchange—and of frustration with the New York duopoly. TXSE CEO James Lee explained that the new exchange’s goal is to “create more competition around quote activity, liquidity and transparency.”

For years public companies and brokers have complained about high fees at Nasdaq and the NYSE, but they’ve paid up for access to America’s deep capital markets. Even so, the duopoly’s fees have helped drive some 40% of trading volume off the two exchanges, resulting in less liquidity and worse pricing on the exchanges.
...

Texas is now a much more prosperous state and has more companies headquartered in Texas than are headquartered in New York.  One of the reasons for that is that taxes are much lower in Texas than in New York.  Texas also has fewer regulatory hurdles.

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