Want to avoid woke stockmarket rules? List in Texas

“Equities in Dallas,” cried the traders in “Liar’s Poker”, an account by Michael Lewis of his life as a junior banker in the late 1980s. Demotion from New York to the backwater of Texas would be a humiliation. Who wants to sling shares to yokels?

Times may be changing. On June 4th an upstart Texas Stock Exchange (TxSE) said it had received $120m in funding from financial giants including BlackRock, a fund manager, and Citadel Securities, a marketmaker. The TxsE will, its boss wrote, be the best-capitalised challenger to the New York Stock Exchange.

No New Yorker should expect actual exile, for the exchange will be electronic. The aim is to lure firms that resent the Big Apple’s listing requirements. The Nasdaq, a tech-heavy exchange, introduced a rule in 2021 requiring many firms to have two “diverse directors” by December 2025, one of whom must be a woman and one gay, lesbian, bisexual, trans or from another “underrepresented minority”—or else to “provide explanation”. The TxsE will be less demanding.

America once boasted dozens of exchanges. At first, Philadelphia’s was America’s leading stockmarket. The opening of the Erie Canal in 1825, which turned New York into America’s main port, and the decline of the Philadelphia-based Second Bank of the United States saw Wall Street eclipse its rival. Firms then plumped for the deepest and most liquid market. Even the gold rush of the late 19th century, which saw regional exchanges spring up, was not enough to reverse the trend. Today America is left with a handful of exchanges, mostly based in Chicago and New York, but available anywhere in the country with electronic communication.

Even the NYSE is now starting to look like a relic, though, with its opening bells, 9.30am-to-4pm hours and blue-jacketed traders. By contrast, exchange-traded funds, one of the most common ways of buying shares, trade off-exchange and after hours. Geography is irrelevant and listing locations ought to have little impact on valuations or the liquidity available. That makes things easier for an upstart based somewhere unusual, and offering less demanding requirements. “Equities in Dallas” may one day be said with more relish.■

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