Texas Stock Exchange: The New Kid on the ETF Block

The Texas Stock Exchange (TXSE) is making waves in the financial world with its bold hiring strategy, poaching top talent from industry giants Cboe Global Markets and Nasdaq. This move is more than just a personnel shuffle; it's a clear signal that the upstart exchange is serious about carving out a significant share of the $11 trillion U.S. ETF market. But what does this mean for the established players, and can TXSE really shake up the status quo?

The hiring of Robert Marrocco, formerly the global head of ETP listings at Cboe, and Alison Hennessy, the former head of ETP listings at Nasdaq, is a strategic masterstroke. Marrocco's tenure at Cboe saw the exchange capture nearly 30% of all new ETP listings since 2020, a testament to his expertise and success in the field. Hennessy's experience at Nasdaq further bolsters TXSE's capabilities, as together, these leaders managed more than 40% of all ETPs in the United States. This is not just about talent acquisition; it's about signaling intent. As Bryan Armour, ETF strategist at Morningstar, noted, "The fact that they are poaching top talent from two of the three biggest exchanges sends a clear signal that they are to be taken seriously as a future competitor in the ETF sector."

But the road to regulatory approval and market dominance is fraught with challenges. The TXSE is still awaiting regulatory approval to begin operations, a process that could take until later this year. Meanwhile, the competitive landscape is already heating up. The New York Stock Exchange has announced plans to open its own NYSE Texas division, a clear response to TXSE's moves. This is not just about competition; it's about survival in a rapidly evolving market.

The ETF market is experiencing unprecedented growth, with up to $8 trillion in new assets projected in the U.S. alone and total global assets estimated to top $25 trillion by 2030. This growth is fueled by the increasing popularity of ETFs among investors, who are drawn to their liquidity, diversification, and cost-effectiveness. TXSE is positioning itself to capitalize on this trend by offering a superior listing environment that prioritizes liquidity, pricing, and visibility. As James H. Lee, TXSE chairman and CEO, said, "The ETP market is growing at an unprecedented pace. The Texas Stock Exchange is committed to delivering the innovation, operational expertise, and alignment that sponsors require to capitalize on this next wave of global expansion."

But can TXSE really differentiate itself in a crowded market? The exchange is betting on its strategic hires and innovative approaches to co-branding and market intelligence. Zoran Perkov, former chief executive of the Long Term Stock Exchange, has joined TXSE as vice president of strategic operations, while William Bailey will lead its market intelligence group. Together, they aim to offer real-time analytics and strategic insights to listing partners, ensuring that they have access to timely and actionable market intelligence.

The hiring of top ETF executives from Cboe and Nasdaq by the Texas Stock Exchange is a bold move that signals its intent to compete in the ETF market. But the road to success is fraught with challenges, from regulatory approval to intense competition from established exchanges. TXSE's strategy of leveraging its new hires' expertise, offering a superior listing environment, and providing real-time market intelligence could help it differentiate itself in a crowded market. However, only time will tell if the upstart exchange can truly shake up the status quo and redefine the future of capital markets.