For the first time in over two decades, a fully integrated national securities exchange has launched in the United States, presenting a significant new alternative to the long-established dominance of the New York Stock Exchange (NYSE) and Nasdaq Stock Market. The Texas Stock Exchange (TXSE), headquartered in Dallas and ambitiously marketed as "Y’all Street," secured crucial Securities and Exchange Commission (SEC) approval in September 2025. Following this endorsement, it commenced live trading operations in July 2025 and began accepting primary corporate listings in October 2025, signaling its intent to carve out a substantial niche in the competitive US capital markets landscape.
TXSE enters a market historically defined by NYSE and Nasdaq, yet it operates entirely within the existing federal regulatory framework. As self-regulatory organizations registered under the Securities Exchange Act of 1934, TXSE, NYSE, and Nasdaq are all subject to the same overarching federal mandates. This means companies listing on TXSE will continue to adhere to vital regulations such as the Sarbanes-Oxley Act, the Dodd-Frank Act, and all applicable SEC disclosure rules, ensuring a baseline level of compliance and investor protection familiar to public companies.
The SEC’s approval of TXSE was predicated on its finding that the exchange’s initial and continued listing standards, along with its corporate governance requirements, are "substantially similar" to those of its established counterparts. This strategic alignment aims to ease the transition for potential issuers, allowing companies to list or dual-list on TXSE without undergoing significant overhauls of their existing governance structures. However, as legal experts Blessing Adeyeye and Evelyn Li of McCarter & English have noted, while many aspects are familiar, TXSE introduces notable divergences, particularly in its proposed approach to handling broker-held uninstructed shares and its single-tier listing model.
The Listing Process: Navigating Initial Standards
Companies aspiring to list on TXSE, much like those seeking admission to NYSE or Nasdaq, must meet stringent eligibility criteria and navigate a defined listing process. TXSE distinguishes itself by formalizing its upfront review with a mandatory, confidential pre-application eligibility process. This initiative, outlined in TXSE Rule 16.201, allows potential issuers to undergo a no-cost, confidential assessment to determine their suitability for listing. Upon a positive determination, TXSE issues a clearance letter, valid for nine months, providing companies with a defined window to proceed with their formal listing application and execute a listing agreement.
This pre-application review bears resemblance to NYSE’s preliminary confidential eligibility review, offering issuers a degree of pre-clearance before committing to the full application. Nasdaq also mandates a listing application and agreement, coupled with a corporate governance certification that scrutinizes aspects like board and committee composition. While all three exchanges retain ultimate discretion in approving listings, TXSE’s mandatory pre-application review offers a more structured and transparent initial screening, potentially reducing uncertainty for issuers earlier in the process.
A critical initial requirement for TXSE listings, detailed in its rulebook, is the engagement of four registered and active market makers, though exceptions exist for companies meeting specific financial thresholds. This requirement is largely comparable to Nasdaq’s market-maker stipulations, whereas the NYSE’s designated market-maker model does not impose an equivalent quantitative mandate.
Significantly, TXSE has opted for a single listing tier. The quantitative standards for this tier are generally aligned with the upper-tier requirements of its established competitors. For domestic common stock, TXSE typically requires 400 round-lot holders and 1.1 million publicly held shares. The market value of publicly held shares must generally be $40 million for companies listing in conjunction with an Initial Public Offering (IPO), spin-off, affiliated-company test, or initial firm commitment underwritten public offering. For other listing scenarios, this figure rises to $100 million. Financial qualifications are assessed through either an earnings test or a global market capitalization test, as per TXSE Rule 16.310(c). This single-tier structure, while potentially simplifying the process by avoiding separate market tiers, may render TXSE less accessible to smaller issuers that might otherwise qualify for Nasdaq’s Capital Market.
Maintaining the Listing: Continued Standards and Dual Opportunities
TXSE’s framework for continued-listing, detailed in Rule 16.320, echoes many of the requirements observed on NYSE and Nasdaq. A cornerstone of these requirements is a minimum bid price of $1 for continued listing. Under TXSE Rule 16.320(b)(1), a company faces delisting procedures if its average bid price remains below $1 for a consecutive 30-trading-day period.
Beyond bid price, TXSE also monitors shareholder distribution, the number of publicly held shares, market capitalization, shareholder equity, and market maker activity. For instance, a company is deemed to be in violation of compliance standards if its average global market capitalization over a 30-trading-day period falls below $50 million while its shareholder equity also remains below $50 million. Suspensions and delisting procedures are also initiated if a company, particularly one listed under specified financial standards, experiences an average global market capitalization below $15 million for 30 consecutive trading days. These continued-listing standards are broadly comparable to those of NYSE and Nasdaq, though specific quantitative thresholds and deficiency procedures warrant careful consideration by issuers contemplating a primary or dual listing.
Recognizing the strategic advantages for established companies, TXSE explicitly permits dual listings under Rule 16.205. This provision allows companies already listed on another national securities exchange to add a TXSE listing without relinquishing their primary listing on NYSE or Nasdaq. Furthermore, TXSE’s framework accommodates uplisting from the over-the-counter (OTC) market, provided the issuer meets all applicable initial listing standards. For public companies, a dual listing on TXSE offers a pathway to explore the new exchange’s potential benefits while maintaining the stability and recognition of their existing listing. However, beyond meeting quantitative and governance benchmarks, issuers considering a dual listing or a transfer must also evaluate critical factors such as trading liquidity, investor familiarity with TXSE, and the operational complexities of managing listings across multiple exchanges. These considerations are particularly salient as TXSE continues to build its track record and market presence.
Catering to Global Issuers: Foreign Private Issuer Standards
TXSE, like its established peers, provides a listing venue for Foreign Private Issuers (FPIs). Its listing standards for FPIs are specifically tailored for "major non-US companies," as outlined in TXSE Rule 16.312. Under this rule, an FPI can qualify for listing by meeting either TXSE’s domestic listing standards or its distinct alternative FPI standards.
The alternative FPI standards emphasize a broad and liquid market for the company’s securities and necessitate heightened distribution thresholds. These include requiring 5,000 holders of 100 or more shares globally, a minimum of 2.5 million publicly held shares, and generally $100 million in market value of publicly held shares. Additionally, an FPI must satisfy one of several financial tests, which can be based on earnings, global market capitalization, revenue, cash flow, or affiliation with another listed company. These requirements are demonstrably more stringent than TXSE’s domestic listing standards, reinforcing the exchange’s focus on attracting larger, established foreign corporations.
Consistent with Nasdaq’s practices, TXSE mandates that FPIs disclose interim financial information on Form 6-K at least semiannually, as stipulated in Rule 16.312(a)(7). The exchange also imposes additional requirements on FPIs seeking to list following a reverse merger, as per Rule 16.312(b)(5). This mirrors the approach of NYSE and Nasdaq, which also have supplementary listing requirements for reverse-merger companies, including meeting initial listing standards and demonstrating specific trading history, reporting, and minimum price compliance. TXSE retains the discretion to impose even more rigorous conditions based on the unique circumstances of an applicant, meaning that a company that became public via a reverse merger remains subject to all applicable TXSE listing requirements.
A significant accommodation for FPIs across major exchanges, including TXSE, is the allowance to adhere to home-country corporate governance practices in lieu of certain exchange-specific requirements. Under TXSE’s framework, FPIs can leverage home-country practices for numerous provisions within Rule Series 16.400, as well as for specific director compensation disclosures and annual and interim report distribution requirements, subject to defined exceptions. Nasdaq offers similar flexibility under its Rule 5600 Series, while preserving critical requirements such as audit committee independence under Exchange Act Rule 10A-3, notification of material noncompliance, voting rights, and clawbacks. The NYSE provides comparable accommodations under Section 303A, with exceptions that include Rule 10A-3 audit committee mandates, disclosure of significant deviations from US corporate governance practices, and notification of material noncompliance and clawback provisions. Crucially, FPIs relying on home-country practices must ascertain which exchange requirements remain non-negotiable despite these exemptions. Both TXSE and Nasdaq require supporting certifications from independent home-country counsel, whereas the NYSE mandates that FPIs publicly disclose any significant differences between their corporate governance practices and those expected of domestic NYSE-listed companies.
Corporate Governance: Familiar Pillars with a Distinctive Voting Proposal
TXSE’s corporate governance requirements, primarily detailed in Rule Series 16.400, largely mirror those of the established exchanges. Its audit committee mandates align closely with Nasdaq’s, its internal audit function provisions are comparable to NYSE’s, and its exemptions and phase-in periods generally follow Nasdaq’s model. Similar to both NYSE and Nasdaq, TXSE permits newly public companies a grace period of up to one year to phase in certain board and committee independence requirements.
Key Corporate Governance Requirements Comparison:
| Governance Requirement | TXSE (Rule Series 16.400) | NYSE (Section 303A) | Nasdaq (Rule 5600 Series) |
|---|---|---|---|
| Majority-Independent Board | Required, with IPO phase-in (Rule 16.405(b)) | Required (Section 303A.01) | Required, with applicable cure period (Rule 5605(b)(1)) |
| Audit Committee | Independent committee subject to Exchange Act Rule 10A-3 (Rule 16.405(c)) | At least three members and subject to Rule 10A-3 (Section 303A.06) | Independent committee subject to Rule 10A-3 (Rule 5605(c)) |
| Compensation Committee | At least two members, each independent (Rule 16.405(d)) | Required (Section 303A.05) | At least two independent directors (Rule 5605(d)) |
| Nominating Oversight | Independent directors or committee oversee nominations (Rule 16.405(e)) | Independent nominating/corporate governance committee required (Section 303A.04) | Independent directors or committee oversee nominations (Rule 5605(e)) |
| Code of Conduct | Required (Rule 16.406) | Required (Section 303A.10) | Required (Rule 5610) |
| Corporate Governance Guidelines | Generally tracks Nasdaq | Required and publicly available (Section 303A.09) | Not required |
For companies already familiar with Nasdaq’s governance framework, TXSE’s requirements will likely feel very familiar, particularly concerning board and committee independence, along with the applicable exemptions and phase-in periods. NYSE maintains some distinct requirements, such as its mandates for a standalone nominating/corporate governance committee and the public availability of corporate governance guidelines.
TXSE’s shareholder approval requirements, outlined in Rule 16.412, also closely align with Nasdaq’s "20% rule." Both exchanges generally require shareholder approval for certain acquisition-related issuances that represent 20% or more of pre-transaction common stock or voting power, issuances resulting in a change of control, certain equity compensation plans, and specific nonpublic issuances involving 20% or more of pre-transaction common stock or voting power at a price below the applicable minimum. NYSE’s framework under Section 312.03 is similarly structured, necessitating shareholder approval for related-party issuances, change-of-control issuances, and certain issuances representing 20% or more of pre-transaction stock or voting power. While these regimes are broadly comparable, subtle differences persist in how affiliated-party and acquisition-related issuances are treated, which companies should meticulously consider when structuring significant equity transactions.
A Departure in Shareholder Voting: The Uninstructed Broker Share Proposal
Perhaps the most significant and closely watched departure from existing NYSE and Nasdaq governance practices is TXSE’s proposed approach to broker-held uninstructed shares. Under proposed Rule 13.003, brokers holding securities primarily listed on TXSE would be required to vote uninstructed shares in direct proportion to the voting instructions received from beneficial owners. For instance, if 60% of instructed shares are voted in favor of a proposal and 40% against, the uninstructed shares would be allocated accordingly.
This proposed rule stands in stark contrast to the long-standing broker-voting framework on NYSE and Nasdaq. Currently, brokers are permitted to vote uninstructed shares only on certain routine matters, while generally prohibited from voting them on non-routine matters. TXSE argues that its proportional approach would eliminate broker discretion, ensure consistent treatment of uninstructed shares, and ultimately assist issuers in achieving quorum. The SEC is currently reviewing public comments on this proposed rule change, with a decision pending after the conclusion of the comment and rebuttal periods. As this rule remains in its proposed state, issuers should closely monitor its status and consider its potential ramifications for shareholder voting dynamics and quorum achievement if ultimately adopted.
Conclusion: A Familiar Yet Evolving Landscape
The Texas Stock Exchange has strategically positioned itself to be recognizable to potential issuers. Its listing standards generally align with the upper tiers of established exchanges, and its corporate governance requirements largely mirror those of NYSE and Nasdaq. The key distinctions TXSE introduces—its single listing tier, mandatory pre-application review, and the proposed proportional voting of uninstructed broker shares—appear to be targeted refinements aimed at enhancing efficiency and addressing perceived market needs.
Companies considering a primary or dual listing on TXSE must conduct a thorough evaluation. This includes assessing their alignment with TXSE’s quantitative standards, mapping their existing governance practices against the exchange’s requirements, and identifying any potential areas of divergence that could impact ongoing compliance. Given that TXSE is a nascent exchange and certain aspects of its regulatory framework are still under development or subject to SEC review, issuers and their advisors are strongly encouraged to consult the most current TXSE rulebook and relevant SEC filings when assessing a potential listing opportunity. The emergence of TXSE represents a significant development in the US capital markets, offering a new avenue for companies seeking to access public capital, while simultaneously introducing novel considerations for corporate governance and shareholder engagement.
