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June 8, 2024 - 2:30pm
This week, news broke that an organisation by the name of TXSE Group was planning to challenge the NYSE and Nasdaq by launching a Texas Stock Exchange, based in Dallas. Big backers with deep pockets are involved: TXSE has already raised $120 million from investors including BlackRock and Citadel Securities, “as well as prominent business leaders from around the country”.
According to the WSJ, the idea behind the TXSE is to be “more CEO-friendly”, apolitical, and with fewer “onerous” compliance costs than the NYSE-Nasdaq duopoly. The strategy is to attract companies that are displeased with regulations such as Nasdaq’s “Board Diversity Rule”. In force since 2023, this rule requires boards to have at least one member who self-identifies as a woman and another who self-identifies as an underrepresented minority or LGBTQ+.
For those mystified by who might qualify as an underrepresented minority, Nasdaq provides a helpful list: “an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities”.
Needless to say, this could be more easily summarised as “not white”. Nasdaq also provides companies with a handy “board diversity matrix template”. But perhaps the most interesting part of the rule is the public shaming aspect: Bloomberg Law reports that naughty organisations which fail to hit their quotas are obliged to explain “in their proxy statements or on their websites why they’re unable to comply”.
Meanwhile, an increasing number of companies prefer to stay private. According to CNN, the number of companies listed on US exchanges has dropped from 8,000 to 3,700 since 1996: “Intensified reporting requirements, higher litigation expenses, costly regulations, overbearing board governance, shareholder activism, heightened public scrutiny and the pressure of quarterly earnings have driven companies away from public markets.”
In this context, it is especially interesting to see BlackRock as one of the big backers behind the TXSE. BlackRock is closely identified with “stakeholder capitalism” and its CEO Larry Fink was a driving force in the ESG movement, although in recent years he has attempted to put some distance between himself and the term. Whenever BlackRock is accused of boycotting energy companies Fink likes to stress how much his fund has invested in hydrocarbons, and this February he appeared at an event with Dan Patrick, the Lieutenant Governor of Texas. Nevertheless, in March Texas terminated an $8.5 billion investment in BlackRock on the grounds that the fund’s “boycott of energy companies” is against the state’s interests and “incompatible with the asset manager’s fiduciary duty to Texans”.
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SubscribeIf you want to understand why people in the US deep south – just like those in South Asia – are not keen on giving up cheap energy for the sake of climate change, then try living and working in either region without air conditioning.
Not only that there is also so much nature out here – too much. You constantly have keep your yard mowed and have the pest control guy come over to spray for bugs. Climate change fear is really an urban thing.
Just spent 4 days without power here after wind blew over some transmission lines. If any single climate activist lived here for 4 days without power, they would all recent, repent, and go get a job with an oil company, rather than face a potential future with widespread insufficient power.
“If you build it, he will come.”
~Field of Dreams (1989)
It seems that more and more people are subverting the will of the Powers That Be by voting with their feet. Moving out of overbearing cities, emigrating, seeking alternate suppliers of service.
Nasdaq’s “Board Diversity Rule”???
TXSE sounds like a superb idea. The ESG-fixated can have their exchange – and traditional folk can have a sensible alternative. How about rebranding NYSE as the “Delaware Exchange”. That might give the progressives a great brand to spaff their pension funds into.
Larry Fink is all about ESG. He is essentially the very face of ESG. I’m sure he’s going to Texas for some other nefarious reason.
Beware of Trojans bearing gifts.
yep, Fink is the last person on the planet that should be trusted.
This is yet another reason to be a proud citizen of the Republic of Texas.
Larry fink hates white gentiles. He is a Christ hater. Isn’t it obvious?
Fink has values I do not like, but could we please stop with the Anti-Semitism.
So by Nasdaq standards it’s okay if someone self-identifies as, say, a Hawaiian? Wow. Sounds like a bold launch off a cliff there …
If I self-identify as a duck, does that mean I’m really a duck? Quack quack ……
All those WOKE rules put in by New York can drive some companies in red states to move registration to Texas. Musk is moving Tesla from Delaware to Texas. Will he move his stock registration also.
We don’t dislike Texas and even own a house there. But if Texas is taking people and business from New York and California, two of the most beautiful and potentially livable states in the union, it says everything about their governments and little about the charms of the lone star state. They really are that badly run. Amazing.
Given the nature of today’s politics, blue state governments will simply dig in; given the nature of capitalism, corporations will adapt.
Well, I guess next we’ll see a Democrat push in Congress making mandatory the kind of Woke-compliance regulations the Texas exchange is designed to nullify.
An article from a few years ago explained the WEF’s stakeholder capitalism and the role of DEI/ESG. Progressive governments could advance their progressive agendas by favouring corporations that adopted DEI/ESG. Corporations that tick the DEI/ESG box would have a competitive edge on the competition. The Canadian government still does this. To help alleviate the housing shortage a multi-$B fund has been made available to finance local municipal infrastructure improvements – if applications for such projects meet DEI requirements.
There’s a funny video somewhere on YT that tells the story of San Francisco’s DEI project failure. In brief: the City of SF banned any purchasing deals with companies in Red states or any firm anywhere “that does not share our values”. The ensuing financial disaster and subsequent climbdown is pure entertainment.
If the political winds keep blowing in from the Right we should expect (hopefully) that governments drop DEI/ESG requirements. If businesses wish to continue such practices they are free to do so but if there’s no advantage in it why would they.
More proof that the USA needs a “national divorce”. Everyone has forgotten that it was supposed to be “these united states”, not “The United States”. Thank God for Texas, Florida, and other bastions of sanity.