Dallas’ emerging “Y’all Street” is starting to look less like a Texas-sized ambition and more like an actual competitor in the nation’s financial markets.
The Texas Stock Exchange launched live trading in July and completed the rollout of all National Market System securities by the end of that month. September brought another important step: primary listings.
On Sept. 16, Texas Capital’s Texas Equity Index ETF and Texas Oil Index ETF became the first primary listings on the Dallas-based exchange after transferring from NYSE Arca. Texas Capital Chairman, President and CEO Rob Holmes participated in a bell-ringing ceremony marking the occasion.
“Once this exchange came to fruition, it was our responsibility to look at the three exchanges and pick the best one for Texas Capital,” Holmes said in a Bloomberg interview.
Texas Capital’s decision matters beyond the two funds themselves. A new stock exchange can build sophisticated technology, attract investors and begin trading securities, but convincing companies and funds to move their primary listings is another challenge entirely.
TXSE now has evidence that issuers are willing to make that move.
Holmes has argued that the economics of listing on TXSE compare favorably with the established New York exchanges.
“On this exchange, instead of just paying a fee, we pay a fee, but at the end of the day we have a net cash position from the exchange,” he said.
“I think you’ll see many companies follow; there is a lot of interest. We just happen to be first.”
There are already signs supporting that prediction.
Energy Transfer and USA Compression Partners have announced plans to transfer their primary listings from the New York Stock Exchange to TXSE beginning Oct. 5. Dillard’s has also announced that it will move its primary listings to TXSE on the same date. Sunoco LP and SunocoCorp are among the other companies preparing transfers.
That gives TXSE something more substantial than a ceremonial opening. It gives the exchange a developing roster of companies willing to leave an incumbent exchange for Dallas.
Still, early transfers should not be confused with proof that the traditional centers of American finance are about to lose their dominance.
The New York Stock Exchange and Nasdaq have enormous advantages in scale, familiarity and established relationships. Reuters noted that liquidity and other benefits associated with incumbent exchanges remain significant considerations for companies deciding where to list.
TXSE, however, is making its case around competition, technology and Texas’ increasingly prominent role as a corporate destination. The exchange is backed by major financial firms, and the Texas Economic Development Corporation has promoted potential advantages including lower listing and compliance costs, easier access to capital and the opportunity for Texas companies to align themselves with a distinctly regional financial brand.
There is also a political component to the exchange’s development.
Gov. Greg Abbott has publicly championed TXSE, describing its launch as another step toward making Texas a larger force in American capital markets. The 89th Texas Legislature also adopted tax provisions affecting registered securities market operators, including legislation allowing certain transaction rebate payments to be excluded when calculating taxable revenue.
Supporters see that policy environment as part of Texas’ broader effort to attract companies and financial activity. Critics of such state-level competition can reasonably ask how much government policy should be structured around encouraging particular industries or financial institutions.
Ultimately, the market will provide a clearer answer than either side.
Some of the biggest corporate names associated with Texas have yet to make TXSE their primary listing venue. Companies such as ExxonMobil and Tesla have significant Texas ties, while SpaceX has moved its incorporation to Texas but remains privately held. Their presence in the state demonstrates Texas’ growing corporate pull, but it does not automatically translate into listings on its new exchange. Reuters reported that major Texas-connected companies had yet to commit to TXSE as of September.
That distinction is important.
TXSE does not need to replace Wall Street to succeed. Creating a durable third option for companies seeking a primary U.S. listing would itself represent a meaningful change in a market long dominated by the NYSE and Nasdaq.
September’s first listings and October’s scheduled corporate transfers suggest “Y’all Street” is beginning that test with momentum.
