BlackRock and Citadel Back New Texas Stock Exchange

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BlackRock and Citadel Securities are backing a new initiative to establish a national stock exchange in Texas.

BlackRock and Citadel Securities are among the key investors supporting a group aiming to start a new national stock exchange based in Texas. The Texas Stock Exchange (TXSE), headquartered in Dallas, has raised $120 million from more than two dozen investors, according to Chair and CEO James Lee, CNBC reported.

“Texas’ booming economy and the strong economic and population growth among states in the southeast quadrant of the U.S. present incredible opportunities for businesses — and ultimately the Texas Stock Exchange,” Lee said on LinkedIn.

The Wall Street Journal reported on the endeavor earlier, noting that the exchange is positioning itself as a “more-CEO friendly” alternative to the New York Stock Exchange and Nasdaq amid increasing regulation and compliance costs.

TXSE’s website outlines plans for a “fully electronic, national securities exchange” that will seek registration with the U.S. Securities and Exchange Commission. According to the Journal’s report, the group aims to start trading in 2025 and host listings in 2026.

A significant point of contention for existing exchanges like Nasdaq is the rule requiring listed companies to disclose diversity information on their boards of directors. Approved by the SEC in 2021, this rule now faces a challenge in a federal appeals court.

The Dallas Morning News reported that TXSE will target companies in the southeastern quadrant of the U.S. In an interview with the newspaper, Lee expressed gratitude to Texas Republican Gov. Greg Abbott for his support and leadership.

BlackRock’s relationship with officials in Republican-leaning Texas has been complex in recent years, according to Reuters.

The company, a significant investor in oil companies like Exxon (XOM.N), has faced criticism for refusing to divest fossil fuel holdings and has been accused of indirectly boycotting certain industries by advocating for broader emission disclosures from its portfolio companies.

BlackRock CEO Larry Fink was seen alongside Texas Lt. Gov. Dan Patrick in February at an event promoting infrastructure investments in Houston.

However, the following month, a state fund withdrew $8.5 billion from BlackRock’s management, citing concerns over the company’s energy policies. Despite that, a BlackRock spokesperson stated that the company is proud to be a founding investor in the Texas Stock Exchange and aims to enhance liquidity and market effectiveness in U.S. capital markets.

Prior to this involvement, Citadel Securities had supported various exchanges focusing on different assets, including the Members Exchange for equities and options, the FMX Futures Exchange, and the EDX Markets for cryptocurrencies.

The new exchange seeks to capitalize on Texas’s economic growth and favorable business climate to attract companies disenchanted with current regulatory environments. The backing from high-profile investors such as BlackRock and Citadel Securities underscores the potential seen in this venture.

As the TXSE prepares for its launch, it will focus on providing a business-friendly environment, leveraging the economic strengths of Texas and surrounding states to draw in new listings and foster a dynamic trading ecosystem.