‘A Texas-sized project’: A stock exchange could be coming to Dallas

Efforts are underway, but what would the economic impact be for the Lone Star State?

By Sean SaldanaJune 7, 2024 1:50 pm,

If you’ve ever been to New York’s Wall Street, you may have noticed a huge bronze sculpture of a charging bull near the Stock Exchange building. It is not, as many Texans will note, a longhorn, but perhaps we’ll see such a charging longhorn sooner than we think – not on Wall Street, but maybe in Dallas. 

There are efforts underway to launch a Texas-based stock exchange that proponents believe could be a game changer for investors and the Texas economy. 

Bülent Temel is a professor of economics at the University of Texas at San Antonio and he joined the show to explain what this announcement means for Texas. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: I understand you’re a former financial advisor in the corporate world. So you know a thing or two about how the exchanges work. I was reading that after New York, no city has more people working in the finance industry than the Dallas area does. And I know three of New York’s biggest banks – Goldman, Wells Fargo and Bank of America – all recently announced plans to expand in Dallas.

Something’s happening. Why are so many firms moving here? And what does this portend for the possibility of an exchange here? 

Bülent Temel: Yes. So Dallas is one of the financial hubs in the U.S., along with New York, Charlotte and San Francisco. It exists in a Texas economy that has grown so fast, and it’s attracted the attention of many other businesses for a number of reasons.

More than 7,000 firms have relocated to Texas within the last decade only. So it’s just an attractive place to do business. 

Some of the big names behind this announcement of a possible new stock exchange in Texas are BlackRock and Citadel Securities. Can you say something about how big these firms are and what seems to be driving this announcement?

Sure. These are very large market-makers in the stock exchange. And what drives them to be attracted to Dallas are a number of factors that have been turning them off for several years in the established markets.

For instance, the current stock exchanges have been imposing a lot of mandates on them, such as the Nasdaq. Just a couple of years ago, they had a new rule change, and they now require companies that are listed in Nasdaq to satisfy certain diversity requirements on their boards set by Nasdaq. And the trading doesn’t take place as fast as they would like. And some of the transaction fees are too high for the taste of the companies that are listed in New York Stock Exchange and Nasdaq – two main exchanges in the U.S.

So all this backlash kind of manifested themselves in the search for an alternative exchange where these problems would be mitigated, if not eliminated entirely. That’s why I think those large firms back such a project with quite significant sums.

Apparently, the amount of money that this project attracted so far is by far the largest in the history of the U.S. So it’s going to be a Texas-sized project for Texas, for sure.

As I understand it, Dallas is just second to New York when it comes to the number of jobs. I think there’s something like 800,000 people employed in the financial services industry in New York. Dallas, somewhere closer to 400,000. What could this mean as a shot in the arm for the Texas economy were it to happen? 

In terms of employment benefits, the immediate direct impact would be negligibly small, in full honesty, because of this stock exchange will be established as a fully electronic digital exchange where there won’t be any trading floor, as it is in the New York Stock Exchange. And so this company – which is a private company, by the way – that will start this exchange plans on hiring only about 100 people in their headquarters building in Dallas.

But it would be misleading to say that it’s not going to have a positive impact in Texas in the job market because it’s, you know, the very existence of this new stock exchange will have a very positive ripple effect on jobs and business volume inside sectors that would be supporting it, such as the technology firms – especially in places like Austin, that will have to support the digital infrastructure. This system will require legal firms that will deal with the litigation and the other establishment procedures.

So when you consider those types of impact, then both the job and also the business volume impacts will be quite significant, even though we can’t really put any numbers to it at this point.

We have to see how large the scale will be. Is it just a regional exchange with a limited scope, or will it really turn into a proper rival to be much like New York Stock Exchange and Nasdaq?

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