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How the Texas Stock Exchange Could Shape Dallas’ Future

A national stock exchange headquartered in downtown Dallas could drive more company relocations and jobs to the city and state. But many still wonder if it can compete against established exchanges.

Financial titans Blackrock and Citadel Securities have invested $120 million in creating a national stock exchange headquartered in downtown Dallas. Some steps still remain until it’s official, but with the Texas Stock Exchange looming in Dallas’ future, experts believe it could change the city for years.

On top of cementing Dallas’ reputation as the financial capital of the south, some believe it could drive more company relocations and jobs to the city and state. But questions remain as to whether it can be an effective competitor to institutional powers like the New York Stock Exchange and the NASDAQ.

Still, it’s a moment that most experts believe will positively impact Dallas if Texas Stock Exchange CEO James Lee is able to get his registration for it approved by the U.S. Securities and Exchange Commission. He’s eyeing for the exchange to make its first listings in early 2026.

Though he said he won’t be listing any of his companies on the exchange, Dallas billionaire and Dallas Mavericks minority owner Mark Cuban is one of many who’s in favor of it.

“I think it’s an amazing and smart idea. It would be great for Dallas,” Cuban said in an email to The Dallas Morning News. “Not just the jobs, but the improvement on digital infrastructure required, the focus on Dallas-based companies it would bring, and maybe most importantly, it would be a foundation for people to get a better financial education. It would certainly be a place schools took kids, even if it’s mostly just servers. I’m a huge fan of the concept.”

Lee wants to see the Texas Stock Exchange become the third biggest listing venue in the U.S., a giant task as he’ll be competing with institutional juggernauts like the NYSE and the NASDAQ.

Though many local stock exchanges have come and gone over the years, Lee thinks Texas will energize him and the Texas Stock Exchange with its diverse industries and the state’s growing workforce.

“I’m a proud Texan and I’ve been focused on this for decades. It’s really Governor Abbott’s leadership that sparked the idea that led to where we are today,” Lee said. “We have the market structure, expertise and professionals coming together on this project. It’s exciting and it’s going to be felt for decades.”

Changing Dallas’ Culture

The Texas Stock Exchange plans to have 100 employees in Dallas based out of its executive offices in an unannounced location in the downtown area.

But experts like David Choate, COO of Dallas-based brokerage firm CAPIS, don’t think the Texas Stock Exchange’s impact will be felt by the immediate jobs it brings to the area.

“Sorry, 100 more folks downtown isn’t a game changer,” he said. “But we’ve been seeing this cultural shift for the last 30 years. It’s more about the sense of credibility it brings to Dallas as a financial market. We’ve always been a financial center of the Southwest. But this firmly plants us on the map as competitors to New York and Chicago.”

If Dallas culturally shifts to become more like New York or Chicago, financial meccas, as a result of the Texas Stock Exchange, experts predict more outside companies will eye Texas as a viable state for its headquarters or office spaces, said Amirhossein Fard, assistant professor of finance at the University of North Texas.

“I think this could set up Dallas as a more attractive opportunity for local firms, especially in financial or legal consulting sectors that may be closely related to the stock exchange,” he said. “We’re already seeing it now with the new Goldman Sachs campus, but you can expect this to surge high profile financial events and conferences, and could spur new developments. But that could also drive property values higher.”

Dallas is already an important financial capital in the U.S. It has a Federal Reserve Bank, has become the home of 24 Fortune 500 companies and is welcoming dozens of new, wealthy residents.

It’s still trying to reel in more companies which will call the city home through initiatives like Proposition G, a $72 million proposition on the 2024 Dallas bond package which will allow the city to use incentives to entice companies.

But to some, the Texas Stock Exchange, while an effective symbol of financial prestige, won’t be enough to bring in any new companies to the region.

“I don’t know that the possibility a company could list its stocks on a Texas exchange would cause them to relocate their headquarters,” said Thomas George, professor at the University of Houston’s Bauer Professor of Finance. “But it will give people an opportunity to identify itself with Texas if they want.”

The Texas Stock Exchange’s strategy will be to target companies in the Southeast quadrant of the United States from Texas to Florida to become listed. With more companies looking to regions beyond the northeast due to proposed financial transaction taxes, Dallas could be a big winner.

“Given the recent economic success of the state, it is quite likely that firms might be willing to list on a Texas exchange, particularly if its rules and protocols make it attractive,” said Ray Perryman, CEO of the Waco-based research firm, The Perryman Group. “The primary challenge would likely be overcoming the inertia of the long-standing presence and prestige associated with New York.”

Can the Texas Stock Exchange Compete Against the NYSE and NASDAQ?

The Texas Stock Exchange has a tall task ahead of itself in trying to challenge the New York Stock Exchange and the NASDAQ. But Texas gives it a few competitive advantages that will serve it well.

Gov. Greg Abbott, is one of Lee’s assets.

He’s proposed banning financial transaction taxes, will be appointing seven judges onto Texas’ new business courts and has touted himself as a pro-business governor who will protect businesses from pesky regulations. Texas also has no corporate income or personal income tax. Gov. Abbott, unsurprisingly, is a supporter of the Texas Stock Exchange.

“Texas is the economic engine of America, so it’s only natural that Texas launches its own national stock exchange. Governor Abbott was proud to work with new Texas Stock Exchange CEO James Lee and his team to make this dream a reality,” Abbott’s press secretary, Andrew Mahaleris, said in a statement to The News.

“Business leaders are relocating to and investing in Texas at a record pace because we’ve built a framework that allows free enterprise to flourish and hardworking Texans to prosper,” he said. “In Texas, we will continue to cut red tape and protect industry from harsh job-killing restrictions and unnecessary regulations that burden innovators in other parts of the country.”

“Gov. Abbott is not going to run this thing. It’s a private company that would be run by a board and those executives are going to make decisions independent of him,” said, George, the University of Houston professor. “But the branding of it, being located in Texas, it conveys a message to companies that would be listed here about our intentions concerning extra requirements that Texas would not need.”

©2024 The Dallas Morning News. Distributed by Tribune Content Agency, LLC.
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