SEC approves Texas Stock Exchange, first new US integrated exchange in decades

Original Article ↗ Hacker News Discussion ↗

Existing Market Structure & Practical Impact

  • Commenters stress the US equity market is already highly fragmented: ~dozens of exchanges plus dark pools, internalization, and market makers; one more venue is unlikely to change fundamentals.
  • TXSE’s primary matching engine will be in Secaucus, NJ (Equinix NY6) with DR in Dallas, so “Texas” is mostly branding and governance; actual trading latency dynamics remain East Coast–centric.
  • Many see this as analogous to MIAX, MEMX, IEX, LTSE, etc.: new venues that may gain some niche share but won’t displace NYSE/Nasdaq.

Motivations, Governance & Politics

  • TXSE marketing around “alignment with issuers and investors” is widely read as:
    • Favorable rules for large issuers and high-frequency firms (e.g., Citadel Securities, BlackRock backing).
    • Reduced emphasis on DEI/board-diversity style requirements compared to Nasdaq’s (now-vacated) rules.
  • There is debate over whether Texas corporate/legal environment is more “shareholder-friendly” or more corrupt and management-friendly than Delaware.
  • Some see TXSE as part of a broader red-state strategy: deregulation, weakening SEC culture, and building a “Y’all Street” alternative; others call this conspiracy-minded and point out the SEC still fully regulates exchanges.

HFT, Latency & Market Design

  • Large subthread on whether ultra–low-latency trading is beneficial:
    • Pro-HFT arguments: tighter spreads, more liquidity, faster price discovery, easier execution for long-term investors; profits have already been arbitraged down.
    • Critical view: strategies rely on latency arbitrage, spoofing-like behavior, adverse selection and front-running lit orders; they extract rent from slower participants without adding real economic value.
  • Various alternative designs are discussed: speed bumps (IEX), random delays or batch auctions, minimum holding periods, more “human-speed” markets, and different auction models; most are seen as either gameable or harmful to liquidity.
  • Clarifications about Reg NMS, NBBO, dark pools, PFOF, and how retail vs institutional flow is routed.

Texas Grid & Infrastructure Concerns

  • Many jokes and serious worries about Texas grid reliability post‑2021; others argue the big winter blackout was rare, improvements have been made, and outages are comparable to or better than some other states.
  • For TXSE specifically, commenters note critical trading infrastructure is in New Jersey; nonetheless, any DR site in Texas will need serious backup power and fuel logistics.

Issuer Choice & Competition

  • New exchanges mainly differentiate via listing standards, fees, and microstructure.
  • Some see TXSE as healthy competition and a lower-cost, lower-friction listing venue (especially for Texas-based or politically aligned firms); others fear it will attract lower-quality issuers or “Enron 2.0”–style behavior.