Texas Stock Exchange: A New Challenger to NYSE & NASDAQ? | Pivot

1. KSKara Swisher0:00

   The New York Stock Exchange and NASDAQ may be facing some new competition from Texas. The proposed Texas Stock Exchange, which is backed by BlackRock and Citadel Securities, those guys, um, has raised approximately 100... you know who I'm talking about, $120 million from individuals and large investment firms. The exchange, known as TXSE, plans to register with the SEC later this year, begin facilitating trades next year, and launch by 2026. Uh, the TXSE, uh, just f- flips off the tongue, could be fully electronic and would allow dual listings with companies also on the New York Stock Exchange. Texas Governor Greg Abbott told CNBC the new exchange is for companies whose only agenda is capitalism. Oh, shut the fuck up, Greg Abbott. Anyway, what do you think about this? I like a new stock exchange, but they're gonna, like, say we're the not woke stock exchange or some stupid marketing thing like that.

2. SGScott Galloway0:47

   Uh, I think it's great. Uh, I don't like the po- I don't like the politicization of everything, that now we poli- we're politicizing stock exchanges, that they'll try and position NYSE and NASDAQ as blue. The, uh, NASDAQ and NYSE do, I think, get out in front of their skis and start getting into social engineering and, uh, deciding what the composition of boards should be, um, which I'm just not sure that's their job. Um, but they are-

3. KSKara Swisher1:13

   Yeah, I would agree.

4. SGScott Galloway1:13

   Uh, I think you need more competition. And Texas, there's no getting around it, has done an amazing job. The economy in Texas now is larger than Russia, Canada, and Italy. It has more Fortune 500 companies now-

5. KSKara Swisher1:22

   Mm-hmm.

6. SGScott Galloway1:22

   ... than anyone but, th- anyone but California. It's tied with New York. Uh, they, their-

7. KSKara Swisher1:28

   Mm-hmm.

8. SGScott Galloway1:28

   ... value proposition here will be more business friendly, lower, you know, filing fees, probably less disclosure requirements. I feel like, I'm curious if you agree with this, I smell Elon Musk here. I, I would, I, I would bet he's gonna be their first customer and move all of his companies onto this exchange. And if you look at, if you look at these exchanges... Now, the flip side of having these additional standards is that the average PE of stocks trading on the London or Shanghai exchanges is 13. The average PE of companies trading on the NASDAQ or the NYSE is 26, because that additional qu- It's like, it's why people get a higher salary coming out of Princeton or NYU or Stanford, is the screening, the ability to get into these schools is so great that people assume you're better. It's the same... Or more qualified, I should say. It's the same when you manage to get listed on the NASDAQ or the NYSE. People assume that the vetting and the screening means you're a real company-

9. KSKara Swisher2:25

   Sure.

10. SGScott Galloway2:25

    ... and you should trade at a higher multiple.

11. KSKara Swisher2:26

    Why dual listings? Will you explain it? I didn't quite understand. If you allow dual listings, what's the difference? Why would you be on one exchange if you can dual list on both? I mean, you might as well, right?

12. SGScott Galloway2:35

    Well, yeah, but, uh, uh, on an exchange, you're essentially charging the exchange with pairing shares. And I'm-

13. KSKara Swisher2:41

    Mm-hmm.

14. SGScott Galloway2:42

    ... I'm... I don't know, like, which shares get allocated to one exchange. I just don't think logistically-

15. KSKara Swisher2:47

    Right.

16. SGScott Galloway2:47

    ... it makes sense to be trading on multiple exchanges, although c- some companies-

17. KSKara Swisher2:50

    Yeah.

18. SGScott Galloway2:50

    ... do trade in ADR-

19. KSKara Swisher2:52

    Do that, yeah.

20. SGScott Galloway2:52

    ... on a foreign exchange.

21. KSKara Swisher2:54

    Mm-hmm.

22. SGScott Galloway2:54

    But th- but look-

23. KSKara Swisher2:55

    Mm-hmm.

24. SGScott Galloway2:55

    ... i- i- this is another case study... I think competition is good. It'll bring down fees. It'll put pressure. Texas has done a great job-

25. KSKara Swisher3:03

    Mm-hmm, for them too, right?

26. SGScott Galloway3:03

    ... putting pressure on other states and other companies, and I think that's a good thing. I just hate-

27. KSKara Swisher3:07

    Mm-hmm.

28. SGScott Galloway3:07

    ... the politicization of it. I don't... I, I don't know.

29. KSKara Swisher3:09

    Yeah.

30. SGScott Galloway3:10

    We'll see. Competition is good. We should have more than two big exchanges.

Episode duration: 5:23