PivotTexas Stock Exchange: A New Challenger to NYSE & NASDAQ? | Pivot
CHAPTERS
- 0:00 – 0:30
TXSE announced: funding, backers, and launch timeline
Kara lays out the headline: a proposed Texas Stock Exchange (TXSE) backed by major financial players, with plans to register with the SEC and launch within the next few years. She also flags the idea that it may allow dual listings alongside NYSE listings.
- •TXSE backed by firms like BlackRock and Citadel Securities
- •Reportedly raised about $120M from individuals and large investment firms
- •SEC registration planned later in the year; trading next year; launch by 2026
- •Would be fully electronic
- •Could allow dual listings with NYSE
- 0:30 – 0:47
The 'anti-woke exchange' framing and immediate skepticism
Kara reacts sharply to Texas Governor Greg Abbott’s claim that the exchange is for companies whose only agenda is capitalism. She anticipates the exchange being marketed as a 'not woke' alternative and questions the value of that politicized positioning.
- •Abbott pitches the exchange as purely capitalist
- •Kara criticizes political posturing around business infrastructure
- •Concern TXSE will lean on 'anti-woke' branding
- •Kara likes the idea of a new exchange in principle
- •Early focus: marketing narrative vs. actual market utility
- 0:47 – 1:13
Scott: competition is healthy, but politicizing exchanges is bad
Scott endorses the concept of a new exchange for competitive pressure, while arguing that stock exchanges shouldn’t become partisan symbols. He also notes NYSE/Nasdaq sometimes drift into 'social engineering' via governance expectations.
- •Support for more exchange competition overall
- •Dislike of framing NYSE/Nasdaq as 'blue' vs TXSE as 'red'
- •Critique: exchanges getting involved in board composition and social goals
- •Question of whether such governance demands are an exchange’s job
- •Acknowledgement there are tradeoffs in standards-setting
- 1:13 – 1:28
Why Texas can credibly challenge: scale, business climate, and incentives
Scott argues Texas has economic momentum and scale that makes an exchange plausible. He predicts TXSE will pitch itself as more business-friendly through lower fees and potentially lighter requirements.
- •Texas economy described as enormous relative to major countries
- •Texas has surged in Fortune 500 presence (near the top nationally)
- •Likely value prop: lower filing fees and lower costs
- •Potentially less stringent disclosure/regulatory expectations
- •Texas positioned as a serious business hub, not a fringe entrant
- 1:28 – 1:58
Elon Musk as the likely anchor client—and what that implies
Scott says he 'smells Elon Musk' as an early major customer, suggesting Tesla and/or a future SpaceX listing could be used to legitimize TXSE quickly. He frames this as part of a broader push to make the exchange attractive to high-profile companies wanting fewer constraints.
- •Prediction: Musk could be TXSE’s first marquee participant
- •Potential draw: a platform for companies unhappy with NYSE/Nasdaq norms
- •Speculation about moving Tesla and courting SpaceX for an IPO
- •Implied bargaining: fewer disclosure and governance constraints
- •TXSE could attempt to build credibility through a celebrity founder effect
- 1:58 – 2:26
Standards vs. valuation: why NYSE/Nasdaq listings can earn higher multiples
Scott explains that tougher standards and perceived vetting can translate into a valuation premium. He compares the effect to elite university screening and cites differences in average P/E ratios across exchanges.
- •Claim: London/Shanghai average P/E around 13 vs. NYSE/Nasdaq around 26
- •Higher standards can create investor trust and a 'real company' signal
- •Vetting/screening functions as reputational certification
- •Analogy to elite universities producing higher perceived quality
- •Tradeoff: lower barriers may reduce the signaling value of listing
- 2:26 – 2:55
Dual listings: Kara questions the logistics and purpose
Kara asks why dual listings matter and whether companies would simply list everywhere if allowed. Scott notes that exchanges match buyers and sellers and suggests multiple listings may be logistically complex, though cross-border trading via ADRs exists.
- •Kara: what’s the advantage if companies can list on both?
- •Scott: exchanges coordinate trading/liquidity—shares aren’t trivially split
- •Concern about logistical complexity of trading the same equity in two venues
- •Acknowledgement: ADRs offer a precedent for multi-venue access
- •Dual listing raises questions about where liquidity and price discovery live
- 2:55 – 3:40
Back to first principles: fees down, pressure up, and less love for culture wars
Scott returns to the core argument that more exchanges should lower costs and improve service, similar to Texas putting competitive pressure on other states. He reiterates that the political overlay is the worst part.
- •Competition expected to reduce fees and improve exchange services
- •Texas competition has already pressured other states economically
- •Scott’s repeated refrain: politicization is unnecessary and unhelpful
- •Belief the U.S. should have more than two major exchanges
- •Nostalgia for additional market structures like OTC as prior diversity
- 3:40 – 4:05
Board diversity requirements as a flashpoint (e.g., Nasdaq’s rule)
Scott highlights Nasdaq’s requirement for at least one female board member as an example of standards that TXSE could reject to differentiate itself. He argues investors might be better suited than exchanges to demand governance changes, while admitting there are arguments on both sides.
- •Example: Nasdaq board diversity requirement (at least one woman)
- •Question: should exchanges dictate board composition?
- •Counterpoint: investors may be capable of demanding better governance themselves
- •Prediction: TXSE will market itself as 'just an exchange'—less prescriptive
- •Governance rules become culture-war fuel for differentiation
- 4:05 – 4:46
Kara’s view: stop selling ideology, prove you provide better service
Kara agrees competition is good but warns that constant 'woke' rhetoric will alienate people and distract from execution. She doubts companies will abandon NYSE/Nasdaq en masse over a single rule and expects incumbents to retain major listings.
- •Kara: ideological marketing is exhausting and unproductive
- •Focus should be on operational excellence and services
- •Skepticism that governance rules alone will drive major switching
- •Prediction: most big companies will stick with NYSE/Nasdaq
- •Wait-and-see attitude toward whether TXSE finds real demand
- 4:46 – 5:06
How the rollout could get political: state pressure and regional rivalry
Scott predicts Texas officials and local boosters could pressure Texas-based companies to list on the home exchange. He envisions a 'Texas vs. New York' narrative that maps onto red-vs-blue polarization.
- •Potential involvement by Texas financial officials to encourage in-state listings
- •Regional pride framing: 'my team vs their team'
- •Risk of red-state/blue-state polarization shaping financial infrastructure
- •Narrative could influence corporate decision-making and PR
- •The exchange may lean into local identity to gain traction
- 5:06 – 5:23
Bottom line: TXSE could force incumbents to respond on fees and service
They close with cautious optimism: Texas has enough corporate heft to make a new exchange viable, and increased competition could benefit markets. Scott reiterates that the most tangible upside is putting fee pressure on NYSE and Nasdaq.
- •Texas has a large base of strong companies that could seed liquidity
- •More exchanges can push incumbents to lower fees
- •Overall positive view of competitive dynamics
- •Open question: whether politics or fundamentals drive adoption
- •Consensus: competition is good, even if the branding may be annoying
