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

1. 0:00 – 0:30

   TXSE announced: funding, backers, and launch timeline

   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

2. 0:30 – 0:47

   The 'anti-woke exchange' framing and immediate skepticism

   1. KSKara Swisher0:30

      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.

3. 0:47 – 1:13

   Scott: competition is healthy, but politicizing exchanges is bad

   1. 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-

   2. KSKara Swisher1:13

      Yeah, I would agree.

4. 1:13 – 1:28

   Why Texas can credibly challenge: scale, business climate, and incentives

   1. 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-

   2. KSKara Swisher1:22

      Mm-hmm.

   3. SGScott Galloway1:22

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

   4. KSKara Swisher1:28

      Mm-hmm.

5. 1:28 – 1:58

   Elon Musk as the likely anchor client—and what that implies

   1. 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

6. 1:58 – 2:26

   Standards vs. valuation: why NYSE/Nasdaq listings can earn higher multiples

   1. SGScott Galloway1:58

      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-

   2. KSKara Swisher2:25

      Sure.

   3. SGScott Galloway2:25

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

7. 2:26 – 2:55

   Dual listings: Kara questions the logistics and purpose

   1. 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?

   2. SGScott Galloway2:35

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

   3. KSKara Swisher2:41

      Mm-hmm.

   4. SGScott Galloway2:42

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

   5. KSKara Swisher2:47

      Right.

   6. SGScott Galloway2:47

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

   7. KSKara Swisher2:50

      Yeah.

   8. SGScott Galloway2:50

      ... do trade in ADR-

   9. KSKara Swisher2:52

      Do that, yeah.

   10. SGScott Galloway2:52

       ... on a foreign exchange.

   11. KSKara Swisher2:54

       Mm-hmm.

   12. SGScott Galloway2:54

       But th- but look-

   13. KSKara Swisher2:55

       Mm-hmm.

8. 2:55 – 3:40

   Back to first principles: fees down, pressure up, and less love for culture wars

   1. 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-

   2. KSKara Swisher3:03

      Mm-hmm, for them too, right?

   3. SGScott Galloway3:03

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

   4. KSKara Swisher3:07

      Mm-hmm.

   5. SGScott Galloway3:07

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

   6. KSKara Swisher3:09

      Yeah.

   7. SGScott Galloway3:10

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

   8. KSKara Swisher3:13

      Yeah, agreed.

   9. SGScott Galloway3:13

      We used to have the OTC whe- in the US.

   10. KSKara Swisher3:15

       Oh, remember the OT- Oh, yeah, remember that?

   11. SGScott Galloway3:17

       Yeah, USA. So I think it's, I think it's a cool thing. But my, my gut is-

   12. KSKara Swisher3:21

       Mm-hmm.

   13. SGScott Galloway3:22

       ... Elon Musk, they called him and said-

   14. KSKara Swisher3:24

       "Would you move Tesla?"

   15. SGScott Galloway3:25

       ... "Would you move?" And he said-

   16. KSKara Swisher3:26

       SpaceX.

   17. SGScott Galloway3:26

       ... "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"-

   18. KSKara Swisher3:34

       Mm-hmm.

   19. SGScott Galloway3:34

       "... disclosure requirements about X, Y, and Zed."

   20. KSKara Swisher3:36

       Mm-hmm.

   21. SGScott Galloway3:37

       They'll position themselves as more business friendly and less woke.

   22. KSKara Swisher3:40

       Yeah.

9. 3:40 – 4:05

   Board diversity requirements as a flashpoint (e.g., Nasdaq’s rule)

   1. SGScott Galloway3:40

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

   2. KSKara Swisher3:46

      Mm-hmm.

   3. SGScott Galloway3:47

      And I, I think, okay, that makes sense. And I think, well, should the NASDAQ be dictating that?

   4. KSKara Swisher3:51

      Mm-hmm.

   5. SGScott Galloway3:51

      I don't... Shouldn't-

   6. KSKara Swisher3:52

      Too sh-

   7. SGScott Galloway3:53

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

   8. KSKara Swisher3:59

      Well-

   9. SGScott Galloway3:59

      And I think there's good arguments on both ends.

   10. KSKara Swisher4:01

       Yeah.

   11. SGScott Galloway4:01

       They'll exploit that and take advantage of it-

   12. KSKara Swisher4:02

       They will.

   13. SGScott Galloway4:03

       ... and say, "That's not the business we're in. We're an exchange."

10. 4:05 – 4:46

    Kara’s view: stop selling ideology, prove you provide better service

    1. KSKara Swisher4:05

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

    2. SGScott Galloway4:10

       Yeah.

    3. KSKara Swisher4:10

       ... if you go on-

    4. SGScott Galloway4:10

       Rock on.

    5. KSKara Swisher4:10

       ... 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...

    6. SGScott Galloway4:29

       The big ones, yeah. I, I don't know-

    7. KSKara Swisher4:31

       Yeah. Mm-hmm.

    8. SGScott Galloway4:31

       I, I, but, you know, it...

    9. KSKara Swisher4:33

       Yeah.

    10. SGScott Galloway4:33

        This... I would just be shocked-

    11. KSKara Swisher4:35

        Mm-hmm.

    12. SGScott Galloway4:36

        ... if they haven't already said to-

    13. KSKara Swisher4:38

        Yeah.

    14. SGScott Galloway4:38

        ... Elon Musk-

    15. KSKara Swisher4:39

        Yeah.

    16. SGScott Galloway4:39

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

    17. KSKara Swisher4:44

        Right on. Yeah, you're right.

    18. SGScott Galloway4:44

        Yeah.

    19. KSKara Swisher4:44

        They're a hundred percent. That's it.

11. 4:46 – 5:06

    How the rollout could get political: state pressure and regional rivalry

    1. SGScott Galloway4:46

       They're gonna come out of the gates, and not only that, the-

    2. KSKara Swisher4:48

       A couple of these companies.

    3. SGScott Galloway4:49

       ... the, the CFO or the treasurer of, of Texas will start putting pressure on Texas companies to list on the Texas exchange.

    4. KSKara Swisher4:56

       Mm-hmm.

    5. SGScott Galloway4:57

       They'll create some regional, like, my team versus th- their team, red state versus-

    6. KSKara Swisher5:02

       Mm-hmm.

    7. SGScott Galloway5:02

       ... Texas versus New York. You know, uh, you can just see-

    8. KSKara Swisher5:05

       Yeah.

    9. SGScott Galloway5:05

       ... how this is gonna shape up.

    10. KSKara Swisher5:06

        Yeah.

12. 5:06 – 5:23

    Bottom line: TXSE could force incumbents to respond on fees and service

    1. SGScott Galloway5:06

       And, uh, at the end of the day, I-

    2. KSKara Swisher5:08

       We're bigger in Texas. They're gonna do all that. Bigger and better.

    3. SGScott Galloway5:11

       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.

Episode duration: 5:23