Financial firms Blackrock and Citadel Securities have partnered to back the Texas Stock Exchange, a new trading venture based in Dallas, Texas, representatives for the groups announced on Wednesday.
In their press release, the Texas Stock Exchange (TXSE) boasted that the new exchange will offer greater liquidity and access for the public. They explained that they chose Texas for its significant recent economic growth, noting that the state leads the nation in being home to the most Fortune 500 companies. The group plans to submit a registration with the Securities and Exchange Commission later this year.
The TXSE aims to be more CEO-friendly, offering an alternative to the regulatory requirements of the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). Some such regulations may include the NASDAQ’s board diversity requirements, which pressure corporations to have “Diverse Directors,” and require filling out a form that considers board members’ race, sexual preference, and if they are “non-binary.”
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The founder and CEO of TXSE Group, James Lee, commented: “Texas and the other states in the southeast quadrant have become economic powerhouses. Combined with the demand we are seeing from investors and corporations for expanded alternatives to trade and list equities, this is an opportune time to build a major, national stock exchange in Texas.”
The announcement of the new exchange comes just a few months after Texas revoked an $8.5 billion investment partnership with Blackrock, one of the nation’s most powerful asset managers. Texas authorities stated the reason for the split was Blackrock’s advocacy for Environmental, Social, and Governance (ESG) initiatives, which would be a detriment to Texas energy companies.
Texas Governor Greg Abbott recently appeared on CNBC to discuss the new stock exchange. Throughout the segment, he appealed to the ideals of competition and capitalism. In response to a question as to why Blackrock and Texas were seemingly coming together despite their differences on ESG measures, Abbott responded: “Well, Blackrock has been working to try to eliminate the tarnish on their reputation by using ESG rubrics. Remember, Texas passed a law that banned ESG and punished companies like Blackrock, and now the ESG movement is changing dramatically.”
Citadel, like Blackrock, has drawn public criticism in recent years. Citadel is one of the large financial institutions behind the short sellers of GameStop, which critics consider to be a “short and distort” strategy. With financial platform E*Trade considering banning Keith Gill, who started the short squeeze of the stock in 2021, some are skeptical of the sway organizations like Citadel have in financial markets.
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