TXSE Group, the parent company of the newly launched Texas Stock Exchange, said it raised $430 million in a third round of financing, giving the Dallas-based upstart what it called the largest capital position ever assembled by a new U.S. exchange as it works to pull corporate listings away from the New York Stock Exchange and Nasdaq.
More than three-quarters of the new capital came from existing backers, according to the company's funding announcement, which named BlackRock, Charles Schwab, Citadel Securities, J.P. Morgan, Goldman Sachs and Bank of America among its major equity holders. TXSE said its investor base also includes nine of the ten largest U.S. equity liquidity providers, representing more than 85% of trading order flow, and major ETF sponsors overseeing roughly $11 trillion in assets. The round comes almost exactly a year after the Securities and Exchange Commission approved the exchange's application to operate.
Listings start moving from New York
The fresh capital arrived as TXSE notched a string of early wins in its pitch to corporate America. Texas Capital Bancshares and Origin Bancorp have both begun trading on the exchange this month, department-store chain Dillard's has moved its primary listing, and industrial firm CECO Environmental has announced plans to transfer its listing as well. Charles Schwab, already an investor, added a secondary listing on the exchange in early October. TXSE said companies representing a combined $115 billion in market value had announced moves to its platform from the NYSE and Nasdaq in the twenty days before the funding announcement.
"Real competition for primary listings is here, and it is here to stay," TXSE Chairman and Chief Executive James H. Lee said in the announcement, describing the new capital as validation of demand for a third major listing venue. In a CNBC interview earlier this month, Lee said the shift of primary listings out of New York and into Texas was already underway. Chief Financial Officer Jaime Gow said the company would use the capital to accelerate the scaling of primary listings and continuous trading.
Still early days for a listings challenger
The NYSE and Nasdaq have operated as the default home for U.S. public companies for decades, and most of the firms moving so far have come from outside the largest S&P 500 names. But TXSE's roster of backers — which doubles as a list of some of Wall Street's biggest banks, market-makers and asset managers — gives the exchange both capital and a built-in distribution network most startups in financial infrastructure never get. The company says it remains on track to begin full listing and continuous-trading operations for public companies and exchange-traded products later this year, a milestone that would test whether its early momentum can translate into a genuine third option for companies choosing where to list.