BlackRock, Citadel Securities-backed TXSE group to start new Texas Stock Exchange

(Reuters) -TXSE Group, backed by BlackRock (NYSE:) and Citadel Securities, plans to launch Texas Stock Exchange based in Dallas, the company said on Wednesday.

The exchange, which has raised about $120 million, plans to file registration documents with the U.S. Securities and Exchange Commission to start operating as a national securities exchange later this year, the company said.

A rebound in capital markets has sent a plethora of companies from within and outside the United States scrambling to list their stocks, especially on major U.S. indices such as the New York Stock Exchange and the Nasdaq.

“Changes in equities trading markets are driving more volume to exchanges and more choices for issuers and sponsors,” said James Lee, founder and CEO of TXSE Group.

Corporate issuers and exchange-traded product sponsors are demanding more stability and predictability around listing standards and associated costs, TXSE said.

The Texas stock exchange aims to attract listings of exchange-traded products and challenge increasing compliance costs at the Nasdaq and the NYSE, as well as newer rules including setting targets for board diversity at the Nasdaq, as per a report from the Wall Street Journal on Tuesday.

Meanwhile, with sustainable investing gaining prominence, existing exchange operators have also increased their focus on environmental, social and governance (ESG) business opportunities and are increasingly rolling out new ESG initiatives.

Texas has been at the forefront of politically “red” states restricting their public pension funds from doing business with BlackRock and other Wall Street firms that have embraced ESG principles.

BlackRock CEO Larry Fink sought to build rapport with Republican officials at an energy investment summit in Houston in February after Texas blacklisted the asset manager over moves to transition away from fossil fuels.

“TXSE will ultimately create more competition around quote activity, liquidity and transparency, resulting in more consistent and reliable markets,” Lee added.