Does Texas need its own stock exchange? – Marketplace

He Lone Star State will have its own stock exchange, TXSE Group announced Wednesday. The exchange, which will be based in Dallas, is backed by major investors such as BlackRock and Citadel Securities. But considering the nationalized, online nature of today's trade, does the South really need its own exchange?

The Texas Stock Exchange news was positive news for John Diamond, director of the Center for Public Finance at Rice University's Baker Institute.

“Not only because I live in Texas, but I think it's great because it adds competition,” he said.

It is another place where companies can go to access capital besides the Nasdaq and the New York Stock Exchange. And, he said, Dallas is a strategic city.

"In the financial sector, there are enough public companies based in Texas for it to make sense," he said.

But trading isn't happening like it used to, said Jonah Crane of financial advisory firm Klaros Group.

“For a fully electronic exchange, having the exchange located in Texas really just means that you have multiple data centers located in Texas. Most exchanges are not physical places where in-person transactions take place,” he said.

It's not so much about Texas as it is about moving away from the growing list of rules that the NYSE and Nasdaq have imposed in recent years. An example:

“Any company listed on the Nasdaq must observe certain board diversity requirements. “This has become a bit of a controversial requirement,” Crane said.

But to compete with the New York exchanges, the Texas Stock Exchange will have to focus on attracting high trading volume, said Geeyoung Min, a law professor at Michigan State University.

"Even if their purpose is to provide a very different set of regulatory rules, they still need to focus on the fundamentals to achieve that goal," he said.

Fundamentals like a reliable platform and lower fees.