Regional and specialized stock exchanges are returning as demand expands for new products and market locations. The theory that regional or specialized exchanges can bring unique know-how to specific sectors or geographies is driving the buildup.
The list of such exchanges is growing, and the trend is global. For example, the Eastern Caribbean Securities Exchange (ECSE) is the Caribbean’s major regional stock exchange, designed to attract companies with regional interconnectivity and regional investors. Companies such as Grenada Electricity Services from Grenada and the Bank of Nevis from St. Kitts and Nevis found their listing home there.
Recent discussions about a new stock exchange in the US state of Texas, which would compete against the triumvirate of US exchange operators—the New York Stock Exchange, Nasdaq and CBOE—have amplified the trend.
The Texas Stock Exchange (TXSE), to be based in Dallas, will be initially funded with a $120 million investment. In recent years, anti–New York sentiment around issues such as compliance requirements and environmental, social and governance rules has triggered a backlash among many businesses. This, among other factors, has led to the current Texan proposal.
Major liquidity providers, such as BlackRock and Citadel Securities and many Texas-based Fortune 500 companies, are backing the proposed all-electronic bourse.
The TXSE founders applied for US Securities and Exchange’s approval, which is currently pending. The new exchange would give companies a reduction in the high listing requirements often associated with the established exchange operators. Texas is perceived as a business-friendly, low-tax state with limited regulatory requirements, and the entrepreneurs behind this venture hope to bring this type of thinking to the stock exchange space while reducing red tape. Texas’ specialization in the energy sector, meanwhile, would provide energy companies with another avenue for corporate finance solutions.