Since last summer, three separate organizations have announced plans to open stock exchanges in Dallas.
At first, there was the , which plans to open up early next year.
The second was the , which moved its Chicago branch to the Lone Star State and made international headlines last week when it opened its doors and listed Trump Media and Technology Group as its first stock.
The third was the Nasdaq, which already lists more than 200 companies based in Texas.
All of these exchanges are electronic, and that means there won鈥檛 be any hectic trading floor in Dallas with brokers shouting out numbers. But as the financial landscape does change here in Texas, analysts have come up with a clever phrase to capture the moment: They call it the birth of 鈥淵鈥檃ll Street.鈥�
For more analysis, the Texas Standard was joined by Bulent Temel, an assistant professor of practice in economics at the University of Texas at San Antonio.
This transcript has been lightly edited for clarity.
Texas Standard: Seems like we鈥檝e seen a rush of companies looking to set up these electronic exchanges in Dallas. Why is this happening now, and why Dallas?
Bulent Temel: Dallas and the overall Texas economy is rapidly growing, so is the population, and the consumption market is also expanding. And there鈥檚 a high tendency for spending money in Texas, all of which are quite attractive for businesses.
So the exchange markets simply wanna capitalize on that and take advantage of this growth. Whichever exchange opens first, it would be gaining a reputation and an image in the public consciousness as the primary exchange in Dallas, in Texas. And that could drive many local companies to get listed in that exchange.
I鈥檝e heard this described as the first mover advantage.
It is a form of it, yes, it鈥檚 similar to that.
Well, it seems like the New York Stock Exchange was the first to actually open its doors, right? So does it look like they鈥檙e going to be the big winners in this rush to be first?
Potentially, yes, potentially.
What does that mean for this homegrown Texas Stock Exchange?
Well, they will have to compete with the New York Stock Exchange Texas. They would have to perhaps highlight their localness as a way of appealing to customers to get listed with them, because it鈥檚 good to keep in mind that it is possible for companies to get in multiple exchanges.
There are many companies doing that, but it鈥檚 also quite costly for them to do that in terms of legal paperwork and different accounting standards that they have to go by. So they would have to figure out ways to out-compete one another.
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I want to loop back to the big y鈥檃ll street news last week. Trump鈥檚 media company was listed on the Texas headquarters of the New York Stock Exchange. How do you read the tea leaves? What sort of message or signal does that send about the finance industry as it鈥檚 developing in Dallas?
Well, it could potentially encourage more companies to get listed. It鈥檚 almost like an endorsement by the president for this newly established exchange, which could be beneficial for all other companies to follow the suit in that sense. So it鈥檚 a major boost.
Is it clear who the major beneficiaries are going to be of all these different Texas stock exchanges? Are they the exchanges themselves? Is it the financial industry in Texas? Is it banks? How do you see this having an effect on the Texas economy?
Many different stakeholders will benefit. The companies in the DFW area will find opportunities to get listed and raise capital nearly free of charge because each IPO raises about $200 million for the company, and it鈥檚 a type of money that the companies don鈥檛 have to pay back to a lender. So it would boost their growth for sure.
And local investment banks will also benefit because they charge between 6% and 7% of the company鈥檚 values every time there鈥檚 an IPO issued. And there are many such investment banks in just the DFW area.
And of course, the side effects, there will be many ripple effect as well. Local law firms, accounting firms, all services industries, they will be catering to this expansion. They will benefit from that as well.
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All right, so let鈥檚 pull back the sort of the 40,000-foot view, if we can, of what鈥檚 happening here in Dallas. We know that there aren鈥檛 going to be these trading floors like what we see on the financial news networks 鈥� that this, I guess in theory, could be set up anywhere, because we鈥檙e talking about electronic exchanges.
Will this change the culture of a place like Dallas? Do you see it becoming a financial hub? And if so, what does that even mean these days when trades are all done online?
Of course, two stock exchanges, and potentially even three with Nasdaq later on joining the bandwagon, would highlight Dallas鈥檚 reputation as a financial hub. And there will be a lot of economic benefits as a result of that.
But electrification is nothing new. It鈥檚 been going on for at least a quarter century in the U.S. Today, we have seven stock equities exchanges and five of them are already electronized because of various advantages, this form of trading off.
So is Dallas, if not New York, the next San Francisco, the next Seoul 鈥� do you see it actually emerging as one of those big, what, five or seven financial centers in the world?
I do. But not because of these exchanges, but because of other factors that led to these exchanges to be established here. Because those factors are more permanent factors, such as population growth, high consumption state, regulation-weary political culture, and just overall more business-minded culture. These are all very helpful.
And of course, the state having no corporate income taxes and no personal income taxes. These are all very beneficial, very attractive. And for those reasons, Dallas will continue to be a major financial hub. And these two exchanges are just the fruit of that dynamic.
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