Numerous outlets are reporting that Texas is standing up an alternative to the New York Stock Exchange, but the involvement of the investment firm BlackRock has given some observers pause.
BlackRock and others have reportedly invested $120 million in the project, and trading could start as early as next year. While the exchange will be digital, it is expected to be physically located in Texas, according to Newsweek.
Gov. Greg Abbott has expressed enthusiasm for the project.
“Texas Poised for Its Own Stock Exchange: Promising Less Red Tape Than NYSE or Nasdaq. A place where the only agenda is capitalism,” the governor said on X, alongside a link to a news report from The United Business Journal.
Although the exchange would be apolitical, according to UBJ, the creation of TXSE is reportedly motivated by right-leaning investors who have become frustrated by an increasingly restrictive corporate culture and governmental regulatory regime elsewhere in the country.
However, not everyone is so excited by the idea.
Scores of online commentators were immediately skeptical that something owned by BlackRock would bring about the financial freedom or the reprieve from “wokeness” that is being widely highlighted in the press.
“It’s black rock [sic] though. Best believe they’re up to something evil,” X user @hartgoat responded to Abbott’s post.
When WatchGuru, an X account that follows financial markets, announced the TXSE, other commentators responded similarly.
“Why would anyone want to trade on an exchange run by the people that manipulate markets? They’ll manipulate your money directly into their pockets,” read one popular comment from Marcel Kalinovic, ‘The Butcher of Wall Street.’
“Not a good idea to be in bed with any ESG organizations,” wrote user Ken Johnson.
The governor’s excitement about the TXSE is a far departure from his adversarial relationship with the corporation.
“I signed laws that banned Black Rock from participating in the Texas financial system because of its ESG policies that were hostile to the oil and gas industry. It cut them out [of] the multi-billion dollar public finance system in Texas. They’re losing money because of it,” Abbott posted on X in March.
The governor was referencing SB 13, which he signed into law in 2021. The bill, also known as the Investment Protection Act, prohibits several state entities from doing business with any company that discriminates against Texas energy producers like oil, gas, and coal.
Pursuant to the act, state Comptroller Glenn Hegar compelled a list that identified BlackRock and others as discriminating against Texas energy producers.
Hegar’s determination was predicated upon BlackRock’s “environmental, social, and governance” (ESG) investment strategy. ESG is a type of activist investing that considers social change, like promoting diversity, in tandem with profit. BlackRock’s iteration of ESG allegedly resulted from the company’s Climate 100+ agenda, which was going to pivot it toward alternative energy sources before the program was scaled back.
“This is anti-competitive,” Mark McCombe, a BlackRock executive, told the Financial Times about its placement on Hegar’s divestment list. “We have never turned our back on Texas oil and gas companies.”
Earlier this year, the State Board of Education and other government entities announced they were cutting ties with BlackRock.
“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF [Permanent School Fund]. Texas and the PSF have worked hard to grow this fund to build Texas’ schools. BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans,” Chairman Aaron Kinsey stated at the time.
While this instance of activism on behalf of BlackRock was highly publicized, the company has also opposed voter ID laws and promoted DEI.
However, there appeared to be a sudden change in disposition for the company’s CEO, Larry Fink, during a recent earnings call. Foreshadowing the reported motivations behind investment in TXSE, Fink denounced political activism in the company.
“Unfortunately, there are still others out there who put short-term politics, who continuously lie about these issues, they’re putting those issues above the long-term fiduciary responsibilities,” the apparently former ESG proponent said.
“As a fiduciary, politics should never outweigh performance.”