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

Kara Swisher 0:00 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

Kara Swisher 0:30 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.

Scott Galloway 0:47 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-

Kara Swisher 1:13 Yeah, I would agree.

Scott Galloway 1:13 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-

Kara Swisher 1:22 Mm-hmm.

Scott Galloway 1:22 ... than anyone but, th- anyone but California. It's tied with New York. Uh, they, their-

Kara Swisher 1:28 Mm-hmm.

Scott Galloway 1:28 ... 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

Scott Galloway 1:58 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-

Kara Swisher 2:25 Sure.

Scott Galloway 2:25 ... and you should trade at a higher multiple.

Kara Swisher 2:26 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?

Scott Galloway 2:35 Well, yeah, but, uh, uh, on an exchange, you're essentially charging the exchange with pairing shares. And I'm-

Kara Swisher 2:41 Mm-hmm.

Scott Galloway 2:42 ... I'm... I don't know, like, which shares get allocated to one exchange. I just don't think logistically-

Kara Swisher 2:47 Right.

Scott Galloway 2:47 ... it makes sense to be trading on multiple exchanges, although c- some companies-

Kara Swisher 2:50 Yeah.

Scott Galloway 2:50 ... do trade in ADR-

Kara Swisher 2:52 Do that, yeah.

Scott Galloway 2:52 ... on a foreign exchange.

Kara Swisher 2:54 Mm-hmm.

Scott Galloway 2:54 But th- but look-

Kara Swisher 2:55 Mm-hmm.

Scott Galloway 2:55 ... 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-

Kara Swisher 3:03 Mm-hmm, for them too, right?

Scott Galloway 3:03 ... putting pressure on other states and other companies, and I think that's a good thing. I just hate-

Kara Swisher 3:07 Mm-hmm.

Scott Galloway 3:07 ... the politicization of it. I don't... I, I don't know.

Kara Swisher 3:09 Yeah.

Scott Galloway 3:10 We'll see. Competition is good. We should have more than two big exchanges.

Kara Swisher 3:13 Yeah, agreed.

Scott Galloway 3:13 We used to have the OTC whe- in the US.

Kara Swisher 3:15 Oh, remember the OT- Oh, yeah, remember that?

Scott Galloway 3:17 Yeah, USA. So I think it's, I think it's a cool thing. But my, my gut is-

Kara Swisher 3:21 Mm-hmm.

Scott Galloway 3:22 ... Elon Musk, they called him and said-

Kara Swisher 3:24 "Would you move Tesla?"

Scott Galloway 3:25 ... "Would you move?" And he said-

Kara Swisher 3:26 SpaceX.

Scott Galloway 3:26 ... "I'm down with it. I want the following things, and I don't want you to ever ask me for my financials or ask me what my CEO compensation is or"-

Kara Swisher 3:34 Mm-hmm.

Scott Galloway 3:34 "... disclosure requirements about X, Y, and Zed."

Kara Swisher 3:36 Mm-hmm.

Scott Galloway 3:37 They'll position themselves as more business friendly and less woke.

Kara Swisher 3:40 Yeah.

Scott Galloway 3:40 They'll say... Because, for example, I think it's the NASDAQ requires that you have at least one female board member.

Kara Swisher 3:46 Mm-hmm.

Scott Galloway 3:47 And I, I think, okay, that makes sense. And I think, well, should the NASDAQ be dictating that?

Kara Swisher 3:51 Mm-hmm.

Scott Galloway 3:51 I don't... Shouldn't-

Kara Swisher 3:52 Too sh-

Scott Galloway 3:53 Aren't investors smart enough to demand that? Why, why i- why is the NASDAQ in the business of figuring out board composition?

Kara Swisher 3:59 Well-

Scott Galloway 3:59 And I think there's good arguments on both ends.

Kara Swisher 4:01 Yeah.

Scott Galloway 4:01 They'll exploit that and take advantage of it-

Kara Swisher 4:02 They will.

Scott Galloway 4:03 ... and say, "That's not the business we're in. We're an exchange."

Kara Swisher 4:05 Yeah. Yep. I get it. I get it. It'll be interesting to see what happens. We like competition. At the same time-

Scott Galloway 4:10 Yeah.

Kara Swisher 4:10 ... if you go on-

Scott Galloway 4:10 Rock on.

Kara Swisher 4:10 ... and on about woke, you're gonna exhaust us with your stupidity. Anyway, you're just a money exchange, so just hush, hush up and just see if you can give good services to companies. Um, I don't know if people are that annoyed by that one, that rule, necessarily. We'll see. We'll see. I think the companies are gonna stick with New York and NASDAQ. I don't know, I just feel like...

Scott Galloway 4:29 The big ones, yeah. I, I don't know-

Kara Swisher 4:31 Yeah. Mm-hmm.

Scott Galloway 4:31 I, I, but, you know, it...

Kara Swisher 4:33 Yeah.

Scott Galloway 4:33 This... I would just be shocked-

Kara Swisher 4:35 Mm-hmm.

Scott Galloway 4:36 ... if they haven't already said to-

Kara Swisher 4:38 Yeah.

Scott Galloway 4:38 ... Elon Musk-

Kara Swisher 4:39 Yeah.

Scott Galloway 4:39 ... "When SpaceX goes public, have you thought about moving Tesla?" And he's like, "Right on."

Kara Swisher 4:44 Right on. Yeah, you're right.

Scott Galloway 4:44 Yeah.

Kara Swisher 4:44 They're a hundred percent. That's it.

Scott Galloway 4:46 They're gonna come out of the gates, and not only that, the-

Kara Swisher 4:48 A couple of these companies.

Scott Galloway 4:49 ... the, the CFO or the treasurer of, of Texas will start putting pressure on Texas companies to list on the Texas exchange.

Kara Swisher 4:56 Mm-hmm.

Scott Galloway 4:57 They'll create some regional, like, my team versus th- their team, red state versus-

Kara Swisher 5:02 Mm-hmm.

Scott Galloway 5:02 ... Texas versus New York. You know, uh, you can just see-

Kara Swisher 5:05 Yeah.

Scott Galloway 5:05 ... how this is gonna shape up.

Kara Swisher 5:06 Yeah.

Scott Galloway 5:06 And, uh, at the end of the day, I-

Kara Swisher 5:08 We're bigger in Texas. They're gonna do all that. Bigger and better.

Scott Galloway 5:11 Uh, Texas does... Texas has a ton of great companies. It'll force the NASDAQ and NYSE to bring their fees down. Uh, on the whole, I like it.