Texas Border Business
The Texas Stock Exchange (TXSE) is now a reality and trading has begun! It’s a vital part of a burgeoning financial presence in the state, as well as a significant asset for the Texas economy.
The US has a storied history of regional stock exchanges dating back to 1790. Over time, however, because transaction processing modes historically required in-person interaction, it made sense to consolidate the major nodes of activity. As a result, New York became the center of financial activity, and the regional exchanges declined in importance or were absorbed.
For the past couple of decades, there have in effect been only two significant options (NYSE and NASDAQ) for companies seeking to access public markets. It is a basic economic principle that high levels of concentration and unnecessary barriers to entry lead to inefficient outcomes, suboptimal performance, harm to consumers, and a lack of innovation. The sheer inertia of this long-embedded structure has now become a source of inefficiency and a drag on essential capital formation.
Expansion patterns in the country have also shifted markedly in recent decades, and Texas is the epicenter for new locations, expansions, investment, and Fortune 500 headquarters. Impressive growth is ongoing in numerous sectors defining the future of US business activity including energy and climate technology, life sciences, advanced manufacturing, automobiles, advanced semiconductors, electronics, space, and data centers/artificial intelligence.
The state has also been adding jobs across the financial sector much faster than any other area and now leads the nation by a wide margin. The biggest Wall Street banks have significant operations in Texas, with around 100,000 employees (and rising). The state is evolving from primarily a back-office location into a major hub for technology, operations, wealth management, trading support, and increasingly some front-office and investment banking functions. The NASDAQ and NYSE have also expanded their presence.
The TXSE represents a milestone in the development of the Texas financial sector, providing infrastructure which was previously lacking. It spurs development of the related ecosystem of upper management, investor-relations teams, securities lawyers, auditors, and investment bankers. Texas is also seeing a spate of companies changing their domicile from Delaware and elsewhere (a phenomenon known as DExit), and many emerging Sun Belt firms are reaching the point of accessing public markets.
TXSE is well capitalized with experienced personnel operating in a regulatory framework conducive to efficient and cost-effective activity. It introduces much-needed competition into a relatively stagnant system, promoting innovation in technology, enhancing capital access, and benefiting a broad spectrum of enterprises. More efficient capital access enhances growth and prosperity and supports ongoing US economic leadership around the globe. Texas has consistently imported capital since it was a Republic; the task just became a little easier. Stay safe!
_________________
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of more than 3,000 clients over the past four decades.
