TXSE's Form 1 listing application has dropped, and the proposed listing standards are essentially NYSE-matched, with one notable carve-out for what the markets call 'profitless unicorns.' $200M market cap, $4 minimum bid, $1.1M public float, 400 round-lot holders, four market makers required. Plus the earnings test, the exception, and what NYSE Texas (formerly NYSE Chicago, after 143 years) means for the Southeast quadrant.
$40M market value for IPO/spinoff/transaction listings; $200M for other listings. $4 minimum bid at listing. $1.1M public float. 400 round-lot holders (at least 100 shares each). Four market makers required.
Two paths: $10M aggregate pre-tax earnings over three years with at least $2M in each of the last two years; or $12M with $5M in each of the last two years and $2M in the preceding year. Special rules apply for emerging growth companies.
Companies with a $200M+ market cap and a $4+ share price can list without meeting the earnings test. This is targeted at large, scale-up-phase companies (heavy R&D, no current earnings) that wouldn't otherwise qualify.
Essentially NYSE-matched. Higher than NASDAQ ($50M market cap floor). TXSE has stated qualitatively that some currently-listed companies on NYSE and NASDAQ would not meet TXSE standards, a deliberate positioning for quality.
The rebranding of NYSE Chicago after its 143-year history, relocating to Texas. Regulatory approvals are already in hand, relocation is the only step. Not a TXSE competitor in the usual sense; rather, a parallel acknowledgment that Texas demands financial-market infrastructure proximity.
Trading expected to begin in 2026, primarily with secondary listings (companies already listed elsewhere, particularly Canadian energy companies on the Toronto Stock Exchange seeking a U.S. listing). Primary IPO windows opening 2027.
TSX-listed energy and mining companies often pursue a U.S. listing on NYSE or NASDAQ; TXSE, given Texas's energy sector depth, is a natural candidate. The symbiotic relationship that exists between TSX (mining/energy) and NYSE could extend to TXSE.
Dual-listing opportunities for currently-listed companies. Capital flows into the Southeast quadrant. Where peer companies list (peer alignment matters for analyst coverage). Whether NYSE and NASDAQ adjust governance signals in response.
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Brian Elliott: It's always a great thing to have competition, right? Competition makes you stronger. Welcome back to Y'all Street Law Podcast. I'm Brian.
Chuck Kraus: And joining me as always is Chuck Krause, partner at Scale LLP and our resident capital markets guru. Today, Chuck, we're going to be unpacking, I understand, the newly released Form 1 for the Texas Stock Exchange, the proposed listing standards. Are you ready to dive into that? I'm ready.
Brian Elliott: There aren't many Form 1s filed, Brian. It's been a few years, maybe decades, since someone applied for a new stock exchange. So I pulled up this Form 1. I think they probably had to fill it out in paper.
Chuck Kraus: I don't think this was an electronic-only form. But the Form 1 is basically the listing application that the Texas Stock Exchange made to the SEC. And what was interesting about it, what people were looking for, is their proposed listing standards and comparing those to the incumbent exchanges in the New York Stock Exchange and NASDAQ. There were lots of statements made early on at the launch on how the Texas Stock Exchange was going to have a higher standard, how some percentage of the companies that are currently public on the incumbent exchanges wouldn't even qualify.
Brian Elliott: And obviously, this goes to the competition for listings and the statements by the Texas Stock Exchange that there's this untapped market for listings in the Southeast quadrant that they were going to capitalize on. So very interesting to see how they're positioning themselves relative to their incumbent peers. Well, the suspense is killing me. What are the requirements?
Chuck Kraus: Yeah, so three big buckets. So market value of publicly held shares, $40 million if you're coming in on an IPO, spinoff, or other transaction. Otherwise, the headline is $200 million for everyone else. Share price minimum bid of $4 per share at listing.
Brian Elliott: And then public float of at least $1.1 million. And 400, what they call round lot holders. So that is 400 holders of at least 100 shares or more. If you're familiar with that, you're familiar with NYSE, you're going to say, that's basically the same as New York Stock Exchange.
Chuck Kraus: Yep, it really is. So they've kind of matched NYSE without getting into the weeds on it. They also have added an earnings test of either $10 million aggregate pre-tax earnings over the last three years and at least two months. million in each of the last two years, or 12 million with 5 million in the last two and 2 million in the preceding.
Brian Elliott: And then they've got special rules for emerging growth companies. So they have put forward an earnings test. What's interesting, though, is they've also made provision for what we'd call a profitless unicorn. So very large company, very big market cap, but maybe they don't have earnings yet because they're in build-up mode or developing new technology where the R&D expense is just huge.
Chuck Kraus: Lots of companies we can name that are like that. They have made a way for a company to list with at least a $200 million market cap and the $4 share price. And if they meet that, then that earnings test that I mentioned with a pre-tax earnings requirement no longer applies. So I think that's a nod to positioning for some of these larger companies that are still in scale-up mode, which is interesting.
Brian Elliott: So thinking about that, how does that compare with the other exchanges, NASDAQ, and how should companies think about the various listing requirements? And why is it that the Texas stock exchange may be attractive? Yeah, it is on its face. These listing standards appear to be higher, particularly than NASDAQ, which only requires a $50 million market cap.
Chuck Kraus: As I said, they seem to be a little bit more similar to NYSE than maybe some were thinking, but they're definitely being competitive with NASDAQ. I think at the end of the day, they remain focused on this perception that they want to attract quality, that they want to reduce volatility. They want high investor confidence and sort of mid-cap issuers. One of the requirements is that the companies have at least four market makers, which isn't something that necessarily is required on all the other tiered exchanges.
Brian Elliott: So they really want big companies with a market cap, with earnings that have real market makers, not companies that are there without a following, without someone making a market in the stock. So I think that's a good signal for potential companies looking for a real following. But look, remains to be seen how it's going to shake out. We can talk about the timing a little bit, but we're still in application mode.
Chuck Kraus: And I think initially, what we're looking for is trading to start in 2026. But probably, it's going to be secondary listings first, rather than straight IPOs. So I think the first companies you're going to see list are going to be companies that are already listed somewhere else on NYSE, perhaps four enlisted companies in the... Stock Exchange that want to get that U.S.
Brian Elliott: listing. And they may choose, because of the energy following in Texas, to list on the Texas Stock Exchange in addition to the Toronto Stock Exchange. They're looking to eye IPO windows opening up in 2027. So we still have some time to see how it develops.
Chuck Kraus: I don't think this is about necessarily taking business from New York. I think this is providing an avenue for very large private companies that are in proximity to Dallas who can now have a listing sort of in their backyard. And there's so many companies re-domiciling into Texas. And I think this provides those companies sort of a made-in-Texas solution for capital markets.
Brian Elliott: And they're clearly gaining traction because the other big announcement that we saw a few weeks ago is the Chicago Stock Exchange announced that it was officially, after 143 years of being in tech in Chicago, was moving to Texas and rebranding as NYSE Texas. So I think that is a really interesting move because it shows that there's real traction and real interest in providing an alternative sort of trading platform in Texas for these companies in the Southeast quadrant of the United States. Well, we see corporate relocations all the time. It's interesting to see an exchange relocation at the same time.
Chuck Kraus: What do you think it's going to do for sort of local competition for? for exchanges. Yeah, I think, I think it's a great thing. It's always a great thing to have competition, right?
Brian Elliott: Competition makes you, makes you stronger. So I, I love the fact that, that NYSE's made this move to move the Chicago exchange to Texas. I think it just, it puts more of a, of a focus on, you know, if you're looking at a listing, you need to, you need to legitimately consider a listing with one of the Texas exchanges. It'll be really interesting to see as companies, you know, pursue those dual listings.
Chuck Kraus: You also want to be where your peers are. So I've had these conversations with boards of directors about where to, where to list. And, you know, you want to be in markets where you will be followed by those who are following your peers, where you could differentiate yourself from your peers, where if you're going to own, you know, a certain segment, you own all the companies. So I think it's, it's going to be very interesting to see how this becomes really contagious to use that term.
Brian Elliott: And, and more and more companies will follow suit. That's great. These are wonderful updates. What, what should, you know, CEOs and, and GCs be thinking about when they're like, what are the takeaways at this point?
Chuck Kraus: Yeah, I think, I think a couple of things, I think, you know, the first thing you're going to see from the Texas stock exchange, as I mentioned, is this, this opening of, of dual listings. So I think look for, if you're, if you're a company with, with a listing on, on one exchange, you know, consider the benefit of potential dual listing on that other, other exchange. I think also watch capital flows and where equity is being raised, where potential acquisition targets are being listed and, and just what kind of capital they're attracting. I think the other thing we'll want to watch is the governance signals as the, as these listing standards continue to be refined and compared.
Brian Elliott: If, if the, the other exchanges make, make amendments to their standards to move towards what the Texas stock exchange has put out, I think, again, creating that competition and watching your competition respond to your moves is an interesting thing. So I think continue, continue to monitor it, continue to, to follow y'all street for updates and we'll, we'll keep you updated. Thanks so much for the updates, Chuck. That's great.
Chuck Kraus: Yeah. Great. Thanks. Always nice speaking with you.
Brian Elliott: We'll talk to you again soon. Thanks for tuning in to the scale LLP y'all street law podcast. We hope you enjoyed today's episode and found it valuable. .