RecNation seems to think so.
By Ben Swanger
Three or four years ago, when Texas Gov. Greg Abbott first spoke with Jim Lee to gauge his interest in launching the Texas Stock Exchange and leading the public market as its CEO, the finance exec wrote it off. “I did not plan on doing it,” Lee says. “But here we are.”
Here he is, indeed. Since jumping on board, Lee has convinced BlackRock, Charles Schwab, Citadel Securities and an exclusive group of Texas CEOs—including Kelcy Warren, who owns a hefty 32.7 percent of the company’s non-diluted shares—to put $161 million toward the launch of the Texas Stock Exchange. (Lee owns 11.8 percent of non-diluted shares.) The SEC is reviewing its Form 1 registration—a process Lee and Abbott hope will result in the approval for TXSE’s launch.
The most well-funded national exchange to ever file a Form 1, the TXSE is expected to begin trading in early 2026, with listings coming at the end of 2026. It may appear that things are moving fast, but the roots of the TXSE date back to 1968. It was then that the state’s House of Representatives began considering launching a regional exchange.
The New York Stock Exchange and the American Stock Exchange were booming at the time. From 1960 through 1967, exchanges in the U.S. had seen annual trading volume grow from $45.22 billion to $161.7 billion. (According to a report by Russell Investments, annual trading volume in the U.S. in 2023 was $129.27 trillion.) However, regional exchanges only accounted for .082 percent of all trading in 1967. Ever the optimists, state legislators put together a group of experts at The University of Texas at Austin to see if Texas would be the state to break through with a successful regional exchange.
A trio of academics, including finance professor Ernest W. Walker, research assistant Thomas G. Richard, and research assistant Jane Barkley, discovered that Texas companies significantly aided the growth of the national exchanges. The rate of increase in Texas for shares traded on the NYSE exceeded the growth rate for the U.S. by 25 percent and the AMEX by 87 percent, they found.
Despite its role in the market growth, the researchers did not favor the state launching an exchange. “[Regional exchanges] have not provided a better market than the national exchanges. At their best, the regionals only provide an equivalent market,” their report said. “The establishment of a regional stock exchange is rejected for several reasons. The major reason is that existing methods of creating sales will be able to handle the share volumes projected for Texas. … Secondly, the two largest regional exchanges, the Pacific Coast and the Midwest, are largely duplicating the functions of the national exchanges.”
More than half a century later, though, Texas is ripe for a national exchange—one that is trying to topple a duopoly by going toe-to-toe with the New York Stock Exchange and Nasdaq. One that has forced the hand of those legacy players to shift more assets to Dallas. One that is already garnering attention from local companies looking to launch an IPO in the next half-decade and publicly traded ones that could be in favor of dual listings on the TXSE.
Jim Lee (right) nearly passed on Texas Gov. Greg Abbott’s request to have him run the Texas Stock Exchange as its inaugural CEO. “Don’t try to force an idea you doubt. Instead wait for the bigger idea to come along. Grab that, take the risk, and run with it,” Lee says.
“Dallas is no longer just an emerging financial hub,” Lee says. “It is a cornerstone of the country’s financial future. Over the next 25 years, the shift of capital, talent, and corporate influence will continue to accelerate, positioning Texas as a dominant force in global finance. If current trends continue, we believe that Dallas could become the financial capital of the world.”
‘A Great Reinvention’
Dating back to its recovery efforts after the savings and loan crisis, Texas has been pushing toward rivaling New York as a financial hub. On Jan. 1, 1988, federal regulators closed 225 of the 279 savings and loans associations in Texas, including 94 of the largest 100 in the state. From 1983 to 1992, regulators closed 506 commercial banks, approximately one-third of all commercial banks in Texas. Of the 10 largest, nine were either forced to merge with larger out-of-state institutions or were declared insolvent.
The impact was devastating, but state leaders came together to make sure it would never happen again. “They went to work to diversify our economy,” Texas Gov. Greg Abbott said in March during the announcement of Nasdaq’s new Dallas HQ. “And today, there is not a more diversified state economy in the United States. From the S&L crisis to today, the economy has rapidly grown. And now, it’s a natural evolution that Texas becomes a home for capital markets.”
In the past 10 years, the Texas economy has surpassed the economies of Brazil, Italy, Canada, Russia, and Australia. And, with a gross state product of $2.7 trillion, it’s on the precipice of surpassing France. Only six economies are larger than Texas—China, India, Japan, the U.K., Germany and the U.S.
Banking has not only made a comeback in DFW, but the region is amidst a banking and finance boom. Each move further solidifies the area as a financial hub. Hillwood Chairman Ross Perot Jr., a TXSE sponsor, says the floodgates opened after “that Schwab relocation.” (Following its acquisition of TD Ameritrade, Charles Schwab moved its HQ from San Francisco to Westlake in 2019.) “The Wells Fargo expansion was huge, too,” Perot continues. “JPMorgan now has more people in Texas than in New York, which is incredible. Then Goldman Sachs shows up. It has added up to create the start of a financial powerhouse.”
Wells Fargo, which has been planted in San Francisco for decades, is opening a 22-acre hub in Irving this summer. An initial wave of 4,000 employees will assume offices by the end of the year, and the bank will create about 650 new jobs. “The place that east and west coast banks are coming to expand is Texas—mainly Dallas,” Wells Fargo’s DFW market leader Bryan Milner says. “In preparation for the exchanges, our commercial banking team in DFW is going to double over the next 12 months.”
Perot Jr. is right about JPMorgan: More than 30,000 employees are now in Texas, while New York’s totals have fallen from 35,000 to 29,000. Dallas’ Goldman operation is the second biggest worldwide outside of New York City. And Schwab’s Westlake campus houses about 7,000 employees. “This whole economy is amidst a great reinvention,” Perot Jr. says. “We’re going to look back in 10 years and just say, ‘Good Lord.’”
An All-Electronic Exchange
The TXSE says its value proposition is built around decreasing costs associated with being a public company, improving listing standards, and giving leaders free rein to govern their companies how they see fit. According to a preview of its Form 1 released by the SEC in April, it “intends for its system to be relatively simple, without many of the complex order types or instructions available on other national securities exchanges.”
The latter pillar is a direct response to Nasdaq’s former requirement enacted in 2022, which stated that its companies needed to have at least one female director and one director who self-identifies as an underrepresented minority or LGBTQ+ on the company board. In December 2024, the U.S. Court of Appeals for the Fifth Circuit eradicated the rule in a 9-8 vote. “Unless the SEC forces one of these exchanges to do something like that, Nasdaq was handing the NYSE opportunities to get listed companies to switch,” says Steve Valenta, a former Nasdaq director who is now with Dallas-based Cien.ai.
The TXSE will focus on scoring dual listings of companies based in the Southeastern U.S., with a chief focus on Texas brands. The exchange is operating in a temporary home in Weir’s Plaza in the Knox-Henderson district. As far as a permanent location goes, the TXSE website shows its logo on the front of a rendering of Bank of America Tower at Parkside, a 30-story building under construction next to Klyde Warren Park slated to open in 2027. But a source with intimate knowledge of the project says the publishing of that came out of left field. There will be no trading floor—the all-electronic exchange will rely on its primary data center in New Jersey and ancillary data centers in Chicago and Texas to handle trading.
Once its opening bell is rung, Lee says the TXSE will have the highest continuing listing standards of any exchange on the planet. “There are about 4,400 public companies in the U.S. today,” he says. “Fifteen-hundred of them will not qualify for continued listing on the TXSE—about 1,400 of those are listed on Nasdaq. Virtually all the listings on the old AMEX exchange won’t qualify.”
For 100 years, Delaware has captured the overwhelming amount of incorporations due to its corporate-friendly tax laws and legal systems. They generate about $2 billion in annual revenue, accounting for more than a third of the state’s budget. (Ironically enough, it won the TXSE’s business as the exchange is a Delaware LLC.) But Texas launched its own business courts, which began receiving filings on Sept. 1, 2024. Elon Musk re-incorporated his businesses in the state, making SpaceX and Tesla Texas Inc. companies. “Texas has both the disposition and legal resources necessary to accommodate a large influx of reincorporated businesses,” says Greg Samuel, a partner in Haynes and Boone’s newly formed Texas Corporate Governance Practice Group. “Once it becomes clear that the legal framework of Texas mirrors commercial attitudes, no other jurisdiction is better positioned to capitalize on the opportunities being left open by uncertainty in Delaware.”
It might be a lot of companies, but with roughly $62 trillion in market cap across those 4,400 stocks, only about $200 million worth of market cap is attributed to those companies Lee is referencing—these are businesses that typically trade below $4. “Candidly, they shouldn’t be public; they distort the capital allocation process of market makers,” the CEO says.
Lee is also straightforward about the rising costs of maintaining a public company and the diminishing benefits of public markets. He points to SpaceX, which has raised $12 billion in the private markets over the last two decades. “Why would they go public?” he asks. “They have no problem with capital. … There used to be a significant liquidity premium for being public, and that’s just not the case anymore.”
To start, Lee believes the TXSE can capitalize on the mobility of public companies. According to data from Bloomberg, for the first time in American history, more than 50 percent of trading does not occur on the primary exchange on which stocks are listed—51.8 percent to be exact. There are 16 different platforms where trading occurs, including dark pools—off-exchange discreet venues primarily used by institutional investors to execute large trades without impacting market prices. The shift dates back to the early 2000s when the markets went electronic, and Regulation NMS (which states stocks don’t trade where they list, stocks trade where they get the best price) was enacted by the SEC. Take Dallas-based American Airlines, for example.
More than 60 percent of its trading activity occurred off Nasdaq from February through March. “Companies are more mobile than ever,” Lee says. “And we will be the net beneficiaries of that.”
He’s also steering TXSE into the $11 trillion exchange trade product market (ETP), which consists of ET funds, ET notes, and ET commodities, which can provide investors with diverse, liquid, and cost-effective exposure to various asset classes.
But the real question is: Will Texas companies leave the entrenched NYSE or Nasdaq for the TXSE? And will businesses looking to launch an IPO in the next few years consider the new exchange? With Kelcy Warren’s heavy involvement, multiple insiders believe Energy Transfer could dual list. However, one source said revenue the oil and gas giant would gain from doing so would be close to nothing.
Gary Wojtaszek, CEO of Wylie-based RV and boat storage facility company RecNation, is already all in on the TXSE. “I’d love RecNation to be the first company to launch an IPO on the TXSE,” he says. Ultimately, deciding where to list often comes down to relationships. Prior to founding RecNation in 2020 and raising $1 billion for his startup, Wojtaszek was the CEO of CyrusOne. He took the data center company public in 2013. “We listed on Nasdaq because of the personal touch,” Wojtaszek says. “Their CEO at the time would reach out frequently to check in, but I never took a call from anyone at the NYSE asking what I was thinking.”
Wojtaszek thinks an IPO in 2027 or 2028 is realistic for RecNation. “My whole goal in founding this company was to pay it forward to the local community. A big part of my success is owed to this city and state, and I know there are a lot of people like me who have the same level of commitment to the state and would love to be listed on the TXSE,” he says.
For other CEOs like Melbourne O’Banion, it will take more than Texas pride to get him to launch an IPO for his growing insurance company, Bestow, on the new exchange. The TXSE being based here doesn’t have much bearing, he says. “I’d want to list on the exchange that best positions our shareholders for the strongest valuation and outcome,” he says. “Bestow is still a few years away from a potential IPO, but when the time comes, we’ll evaluate and choose the exchange that best supports our growth.”
The Duopoly Fights Back
Only time will tell if Lee has the pitch to send the legacy players to the bench. But one thing is certain: The Texas Stock Exchange forced a response from both.
In April, the NYSE beat TXSE to the punch, launching NYSE Texas with its first dual listing: Trump Media. The company’s prime listing is still on Nasdaq. It then scored a dual-listing from Comstock Resources, which is primarily listed on the traditional NYSE. The NYSE formed the exchange after relocating its Chicago office to DFW. Texas has the biggest number of NYSE listings of any state, representing over $3.7 trillion in market value. (The NYSE declined to comment for this story.)
In March, Nasdaq unveiled plans to establish its second HQ in Dallas. The company has about 120 employees in the state and is looking to station most of them in the new office. At the helm of the office will be native Texan Rachel Racz, the company’s head of listings for Texas, the Southern U.S. and Latin America. She joined Nasdaq in 2013 to help stand up its oil and gas listings operation. Under her watch, she helped the exchange grow from capturing 20 percent of all energy IPOs to 80 percent.
Chart data from United States stock markets
From 2018 to 2024, she held various roles in the energy industry. Now, Racz is back to make sure Nasdaq rules Texas. Across the state, there are about 200 Nasdaq-listed companies with a combined market cap of $1.98 trillion. “We want to win every IPO,” she says. And she isn’t threatened by NYSE Texas getting a dual listing out of Trump Media. “You get no value from a dual listing,” she says. “Trump Media will continue to receive most of its liquidity from Nasdaq.” Nor is she afraid of a startup exchange stealing business away. “Starting a new exchange is hard,” Racz says. “It’s especially hard to capture liquidity as a startup exchange, which typically captures about 2 percent of shares traded.”
The Nasdaq and NYSE might say the TXSE does not threaten them, but Perot Jr. believes otherwise. “The Texas Stock Exchange is why they’re here,” he says. “If they weren’t concerned about the TXSE, they wouldn’t be here.”
Jim Lee saw the relocations coming. “We’re not going to be the only ones,” he said last October, months before the NYSE established its Texas exchange. “There will be other exchanges that set up here, both cash equities and other types of security instruments. So, this is just the beginning of what is happening in Texas. I like to say, if you were going to put it on a trade today, I would long Dallas and short Chicago.”
So, what’s next? According to Lee, the TXSE is considering launching a new capital raise to accelerate its plans. Nasdaq is searching for office space to house its new headquarters in Dallas. Only time will tell if it launches an exchange in the state, too. “We move as our clients move,” Racz says. “If they need it, we will address it.” The NYSE Texas will continue to chase dual listings while the TXSE is still in limbo. “Texas is just at the point of lift-off in terms of acceleration,” Nasdaq CEO Adena Freidman says.
Could these moves culminate in DFW becoming the world’s financial epicenter? In 25 years, Lee believes it’s possible. But Perot Jr. says that’s a tall task. “New York will continue to be the financial center of the world, but Texas is going to be a strong competitor,” he says. “Right now, New York is driving business out, and we will gladly take it. I liken it to when we were able to build the American Airlines Center. That has turned into an economic miracle. There are more miracles coming. I don’t think the market quite knows yet what’s about to hit.”
Ben Swanger is the managing editor for D CEO, the business title for D Magazine. Ben manages the award-winning publication
